Spring Statement 2022 Overview - Capital, People, Ideas
As Rishi Sunak opened his Spring Statement his focus was understandably on the war in Ukraine and the devastating humanitarian impact. He was at pains to emphasise that the UK is in a strong and stable position politically and economically and that this was his priority.
With the economic impact of the war in Ukraine still uncertain and inflation expected to reach 7.4% this year, and despite the cries for support to working families and those on lower income, we were prepared for his stance on current tax increases to remain.
He confirmed his commitment to the Health and Social Care levy. However, he did announce some key measures to ease the working families cost of living.
- Increased National Insurance Threshold to align to income tax of £12,570 from July 2022.
- Fuel duty cut by 5p from tonight until March 2023
- Commitment to reduce income tax from 20% to 19% from 2024.
- Reduction in VAT on energy saving materials for your home from 5% to 0%
- Doubled household support fund to £1bn but its devolved to Local Authorities.
The support for Business was less apparent and the focus was on consultation over the summer with a view to cutting taxes and encouraging investment for business in the Autumn. The key areas he signposted would be reviewed.
- Recognising that the Super deduction has increased capital investment there will be consultation on the capital allowances regime with a number of options being considered including increases in either the annual allowances available or an increase in the rate that relief is given over time. There is even a suggestion to retain relief at >100%.
- As expected the Research and Development tax credit regime will be reviewed further. Somewhat surprisingly there is a suggestion to make the large company R&D Expenditure credit regime more attractive as this is stimulating more growth. Much less surprising is a commitment to clamping down on abuse of the SME regime.
- Looking at ways to encourage investment in training specifically the apprenticeship levy and increasing the employment allowance to £5k.
We did not expect any significant tax announcements and perhaps we got slightly more than we anticipated. There are some laudable plans to encourage growth and investment but as always the devil will be in the detail when it is released.