** Please see our updated blog following the Government’s Mini Budget in September 2022**
The Chancellor announced the Spring Budget today, so what are the most crucial updates?
He did announce most changes in his Autumn Budget, so what’s new?
National Insurance threshold rising
- The threshold increases from £9,880 to £12,570 from 1 July 2022
- This will be in line with the personal allowance for income tax.
- This means an extra £2,690 before employees and the self-employed start to pay NIC, a saving of over £330 per year
- This is for employees, not employers
Employment allowance rises to £5,000 from April 2022
- The employment allowance will rise from £4,000 to £5,000 from 1 April 2022
- This is for employers eligible for small employers’ relief
- The allowance will be used to reduce your employers’ NIC contributions up to £5,000
- As soon as the £5,000 is used up, you will start to pay above this
Who gets the employers’ NIC allowance?
- Employers with NIC contributions of £100,000 or less in the last complete tax year
- Bear in mind that the 1.25% NIC increase in 2022/2023 may push you above the threshold
Basic rate income tax reduced to 19% from April 2024
Don’t get too excited as this isn’t happening for 2 years.
Basic rate income tax will reduce from 20% to 19% from 6 April 2024
This means that 1p in the £1 will stay in your pocket, not the Government.
The reason for making this reduction is because inflation and the cost of living rising.
Making Tax Digital for VAT compulsory from 1 April 2022
- Businesses with turnover over £85,000 have been required to register for MTD for VAT for some years
- This is a new requirement for businesses with turnover below £85,000
- Here’s the HMRC link to sign up to MTD for VAT, if you haven’t already done so.
Fuel duty cut by 5p per litre of fuel
- This will take immediate effect from 6pm 23 March 2022
- The Government says this should save the average 1 car family £100 over a year
- It should save van drivers £200 per year, while hauliers could save £1,500 a year
What else do we need to know?
- Check out our Autumn Budget blog for all the changes, but in particular, here are the detailed updates:
- Wage and NIC increases from April 2022
- Dividend tax increases in April 2022
- Here is a round up of all the other changes from April 2022