Spring Statement 2022 - How it affects you?

I am wearing a spring dress. It can only mean 1 thing… It is time for the Spring Statement 2022 and see how it affects you.

I am Valerie Chan, Director of VF Accountants and ACCA Qualified. Together Transforming You and Your Business.

We will go through 6 of the main announcements made by Rishi Sunak, the Chancellor of the Exchequer:

1. National Insurance

2. Household Support Fund

3. Fuel Duty

4. Employment Allowance

5. VAT

6. Income Tax for 2024

Let's look at each in turn.

First of all, what is National Insurance?

It is a tax paid by employees, employers and the self-employed. This goes towards providing pension, benefits and state support to people who are unemployed retired or sick.

From 6th of July 2022, the National Insurance threshold will be increased by £3,000 per annum. It means that you will not pay National Insurance if you earn up to £12,570 per annum. In effect, you'll be saving up to £330 in a year. However, employers will not benefit

from this increase in National Insurance threshold.

But Rishi Sunak failed to mention the 1.25% increase in National Insurance from 6th of April 2022 known as the Health and Social Care Levy. It is to help the NHS our National Health Service and vulnerable people who need looking after. In effect, those earning above £35,000 will pay more National Insurance.

The Household Support Fund will be doubled to £1 billion. If you know of someone who is vulnerable or who is struggling with their household bills let them know of this help from the council.

There has been a decrease in fuel duty by 5 pence per litre since 23rd of March 2022

This will be effective for 12 months. However, we shouldn't forget that fuel recently

went up by 40 to 45 pence per litre. So, the decrease in fuel duty will benefit

motorists who use petrol or diesel in a small way. But it will not affect motorists who use electric vehicles.

Employment allowance allows eligible employers to reduce their national insurance.

The employment allowance will increase by £1,000 from £4,000 to £5,000 from April 2022. Note that this doesn't apply to a sole director.

For homeowners who install energy saving materials such as solar panels, heat pumps or roof insulation, instead of paying 5% VAT, they will have no vat to pay for 5 years.

Surprisingly, Rishi Sunak announced a reduction in income tax from 20% to 19% but from April 2024, that is in two years' time. This may be a political move as there'll be an election in 2024.

So here you have it the 6 main announcements in the Spring Statement 2022.

Please leave your comments as to whether you found these useful and how you'll be affected by these announcements.

10 views0 comments