Swindon businesses react to the Spring Statement 2022

By Nick Batten on 24 March, 2022

Chancellor Rishi Sunak made his annual Spring Statement speech yesterday where he set out the Government’s tax plan to support the UK economy, businesses and families in both the short and the medium term.

Key measures the Chancellor announced as part of the plan included: 

  • an increase to the National Insurance Primary Threshold for Class 1 National Insurance Contributions (NICs) and the Lower Profits Limit for Class 4 NICs from 6‌‌‌ ‌‌July‌‌‌ ‌‌2022, aligning it with the equivalent income tax personal allowance which is set at £12,570 per annum 
  • 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, which will benefit around 495,000 businesses 
  • an immediate reduction in duty on diesel and petrol from‌‌‌ ‌‌6‌‌‌‌pm on 23‌‌‌ ‌‌March 2022, by 5‌‌‌ ‌‌pence per litre, for 12 months. 

Chris Blackwell, Director of Swindon’s leading independent mortgage advisers TED Mortgages and Michael Blaken, Accounts Director at accountancy and law firm Optimum Professional Services, give us their thoughts…

Chris Blackwell, Director of TED Mortgages

Chris said, “The only item which was housing or mortgage-related was the move to 0% VAT on energy-saving material purchases such as solar panels, heat pumps etc. This is a positive move to encourage people to make environmentally friendly investments into their property. 

“This is something mortgage lenders are encouraging by offering special mortgage deals for properties with a higher EPC rating and I am sure we will see more in this area in the coming years.

“The big announcements were the 5p per litre fuel duty cut, the NIC’s threshold increasing to £12,570 and the reduction in basic rate tax from 20% to 19% by 2024. In the current cost of living crisis, these changes will help millions of people although I doubt it will be enough when considering the cost of everything is rising. These changes will bridge a part of the gap but there will still be a significant chasm.

“The longer-term prospects of unemployment remaining low, national debt/borrowing reducing and inflation to be under control by 2024 sounds promising however we have to be cautious with the underlying concern on how the war in Ukraine will develop, how long it will go on for and the longer-term impacts of it.”

Michael Blaken, Accounts Director for Optimum Professional Services

Michael said, “The Chancellor’s Spring Statement pulled a couple of rabbits out of the hat to help businesses and individuals who are struggling to cope with inflation, which is at its highest level for 30 years, at 6.2%.

“The increase in the National Insurance Contributions (NICs) threshold, to bring it in line with personal allowance at £12,570, would help those on low income. Plans to reduce the basic rate of income tax from 20% to 19% by the end of this Parliament in 2024 are also good news.

“These measures, and the cut in fuel duty of 5p per litre, will help households and also businesses. They may, in turn, ease the pressure on businesses to bring in pay rises, because the increase in the cost of living is being shared.

“As ever, the devil will be in the detail because while the NICs threshold has increased for employees from April, it appears that employers will be paying the same rate.

“However, the increase in Employment Allowance from £4,000 to £5,000 is good news for employers, because it reduces their annual National Insurance liability by an extra £1,000 per year which helps mitigate the April increase in National Insurance rates of 1.25%.”