In yesterdays Spring Statement, the Chancellor announced a new “tax plan” that will ensure the government takes a “principled approach to cutting taxes”. These were made to support the UK economy after inflation hit a 30 year high of 6.2% in February.

Some of the key measures Rishi Sunak announced as part of the plan include:

• An increase to the National Insurance Primary Threshold for Class 1 NICs and the Lower Profits Limit for Class 4 NICs from 6 July 2022, meaning the first £12,570 an individual earns will be completely tax free
• From April 2022, self-employed individuals with profits between the Small Profits Threshold (SPT) and the Lower Profit Limit will not pay Class 2 NICs while allowing individuals to be able to continue to build National Insurance credits
• The Employment Allowance will be increased by £1,000 from 6 April 2022 to £5,000
• An immediate reduction in duty on diesel and petrol from 6pm on 23 March 2022, by 5 pence per litre, for 12 months. Saving £100 for the average car driver, £200 for van drivers and £1,500 for the average haulier
• From 2024, the basic rate of income tax will decrease from 20% to 19%, making the average taxpayer £175 a year better off

Timeline overview:

March 2022: Cutting fuel duty on petrol and diesel by 5p per litre

April 2022: Cutting taxes on small businesses by up to £1,000 – by raising the Employment Allowance to £5,000

July 2022: Aligning the annual National Insurance Primary Threshold and Lower Profits Limit with the income tax personal allowance, making the first £12,570 of earnings tax free

April 2023: Cutting taxes on business investment – by reforming Capital Allowances and R&D tax reliefs

April 2024: Cutting the basic rate of income tax from 20% to 19%

If you’re an Eazitax client with questions on how this tax plan will affect your business, call our tax team on 020 8529 2600 or email info@eazitax.co.uk