The annual spring statement can seem quite daunting to the general public and can often leave you questioning how exactly your lifestyle is going to be affected on a day to day basis. Combine that with the stress of the increased cost of living and our busy lifestyles and you are left with very little time to actually keep up with the highlights from the spring statement 2022. ARB Accountants are here to provide you with an understandable summary of the spring statement 2022.
So, what is a brief summary of the spring statement 2022? The spring statement 2022 set out some key changes to help support the people most affected by the rise in the cost of living. These included a temporary cut in fuel duty, an increase in the household support allowance, and an increase in the employment support allowance.
Carry on reading to learn more about the spring statement 2022 including how the spring statement will affect national insurance, as well as how it will affect income tax.
What is a Brief Summary of the Spring Statement 2022?
The spring statement 2022 detailed an array of changes that are due to be made in order to help people manage the increased cost of living. The cost of living has been influenced by many factors including the impact of Covid-19, Brexit, and most recently by the attacks on Ukraine. The announcement explained that as a result of the UK providing support to Ukraine, the economy will inevitably be affected and the spring statement details measures that are designed to soften the financial impact.
Despite previous efforts to alleviate the struggle people are facing due to the cost of living, the spring statement detailed more measures that are being taken to help people. For example, the government has recognised that SMEs have been hit the most over the last couple of years. As a result, there has been an extension of the business relief rate of over £7 billion for the next five years, as well as a £1,000 increase in employment allowance from April 2022.
Furthermore, the spring statement also detailed how the energy bill rebate will be continued in April. The energy bill rebate will offer a one-off council tax rebate of £150 to households within bands A to D. This rebate will also include an up-front rebate of £200 for energy bills in 2022 that won’t be repayable until 2023. Both of these factors have been designed to help with the increased cost of living for families who do not have savings to help them through these difficult financial times.
2022 Spring Statement Highlights
The spring statement was announced at the end of March 2022 and detailed multiple different measures that are going to be taken to support the general public, SMEs and the overall economy. Below we have pointed out the key spring statement highlights to make things even clearer for you.
- An increase to the level of income at which people begin to make national insurance contributions, from £9,880 to £12,570.
- A 12 month alteration to the level of fuel duty cost of 5 pence.
- An extension of £500 million for the Household Support Fund.
- A decrease in the rate of income tax paid to 19%.
- A reduction in the rate of VAT paid by people who own or use energy saving materials (e.g. solar panels) for the next five years.
- Increased employment allowance budget from £4,000 to £5,000.
- Increased investment in fraud detection and tax collection which will generate £510m in Government savings.
How Will the Spring Statement Impact Me?
The spring statement will affect a variety of people of different levels depending on their occupations and level of income. For the general public, there should be a marginal level relief experienced due to fuel prices being reduced for 12 months. Over the past couple of months, fuel has become a serious issue for everyday families which has resulted in people reducing the amount they travel in order to stretch their budget. With the reduction in fuel by 5p, there should be at least some relief to families to help with monthly costs.
How Will the Spring Statement 2022 affect National Insurance?
People on incomes of £12,750 or lower should also experience some financial relief due to changes in national insurance. Before the spring statement 2022, if you earned £9,880 you would have been required to pay national insurance out of your wages. However, the government has now recognised that this is a particularly low level of income and have made the small alteration to help alleviate some financial distress off of those who earn a low income.
How Will the Spring Statement 2022 Affect Income Tax?
Taxpayers should experience a small financial relief from income tax being reduced from 20% to 19%. This doesn’t come into action until April 2024 but is still a change that the general public can look towards in such financially difficult times. This will benefit everyone from part-time workers, to full time workers, and even the self-employed, and should help to relieve some financial stress across the country.
The 2022 spring statement has outlined various changes that should alleviate some financial pressures from the general public. However, in stressful times it can be difficult to know exactly where you stand in terms of tax changes, alterations to national insurance and other governmental benefits such as energy rebates and fuel prices.
ARB Accountants are small business accountants based in Essex who can provide advice on tax and VAT queries. We also provide business forecasting services that may be helpful to any SMEs that are experiencing financial difficulties in these troubling times.
With uncertain times ahead and alterations to income tax and VAT, it is important to make sure you receive the correct advice for your business. Trust ARB Accountants with your queries and business forecasting to support you through these difficult times.
For more information on our services, don’t hesitate to get in touch today.