Spring Statement 2022

Spring Statement tax summary

The Chancellor grouped his tax (and some other) announcements under three headings –

(1) Helping families with the cost of living

• Increase in the annual National Insurance Primary Threshold and Lower Profits Limit from £9,880 to £12,570, aligning it with the income tax personal allowance from July (delay to July to allow all payroll software developers and employers to update systems). These thresholds will remain aligned
• From April 2022 self-employed individuals with profits between the Small Profits Threshold and Lower Profits Limit will continue to build up National Insurance credits but will not pay any Class 2 NICs
• Increase Employment Allowance to £5,000 from April 2022
• 5p per litre cut in fuel duty that will be in place for 12 months
• Cut to VAT on the installation of energy saving materials

(2) Cutting and reforming business taxes, to create the conditions for private sector-led growth

• Consult on business investment tax regime seeking “the most effective way to cut taxes on investment while ensuring value for the taxpayer”. The main Spring Statement document (pages 37-38) suggests a range of possible options.
• Encourage businesses to offer more high-quality employee training and explore whether the current tax system – including the operation of the Apprenticeship Levy – is doing enough to incentivise businesses to invest in the right kinds of training
• Improvements to R&D tax reliefs, setting out support for data and cloud computing costs, refocusing relief on R&D undertaken in the UK, and allowing businesses to claim relief on R&D supported by pure maths

(3) Share the proceeds of higher growth fairly with working people, through further tax cuts.

• Cut the basic rate of income tax from 20% to 19% from April 2024 (Scottish government will receive their share of funding, which they can use to cut taxes or raise spending)
• Make the tax system simpler, fairer and more efficient including reforming ‘costly and complex’ tax reliefs and allowances

Spring Statement documents

Spring Statement main document (Web PDF / Print PDF / HTML)

The Tax Plan (PDF / HTML)

Policy Costings Document (PDF)

Policy decisions spreadsheet (Excel)

Other documents can be accessed from the Government's Spring Statement webpage

National Insurance Contributions (Increase of Thresholds) Bill - legislation and explanatory notes

Four tax information and impact notes are linked to here  

CIOT immediate reaction to key measures

Income tax and NI - Spring Statement swings and roundabouts will leave taxpayers dizzy
Two of the Chancellor’s headline announcements in the Spring Statement - the alignment of the income tax and national insurance thresholds, and the future reduction in the basic rate of income tax - suggest conflicting approaches to the two taxes, says CIOT. (More)

Capital allowances - time to put in place a regime that will last
CIOT has welcomed the announcement that the Government is considering how to best support future business investment, once the super-deduction disappears in 2023. But the Institute says whatever regime the government puts in place should be there for the long-term, to enable businesses to plan effectively. (More)

VAT and business rate reliefs for green investments welcomed, but an overall strategy is still lacking
CIOT and the Association of Taxation Technicians have welcomed the commitment by the government to use the tax system to encourage investment in green technologies, but called on ministers to commit to a long-term tax strategy for green investment. (More)

Scotland - Income Tax and National Insurance thresholds are not equalised despite today’s headline announcement
Income tax and National Insurance thresholds will not be equalised in 2022/23 following today’s Spring Statement, while the prospect of further income tax divergence between Scotland and the rest of the UK has increased, CIOT has said. (More)

LITRG - Tax campaigners welcome NIC threshold increase as step towards simplification
CIOT's Low Incomes Tax Reform Group broadly welcomes the announcement that the Government will align the starting point for paying class 1 employee and class 4 self-employed NICs with the starting point for paying income tax. The group has argued for many years that such alignment would be a simplification for lower earners. There could, however, be some complexity over the course of the 2022/23 tax year in which the transition occurs. (More)

LITRG - Low-income self-employed need to file Self Assessment tax returns to claim NIC credits
CIOT's Low Incomes Tax Reform Group welcomes the changes to National Insurance for the self-employed. The threshold for paying both Class 2 and Class 4 NICs will be fully aligned with the threshold for paying income tax from 2023/24. The Chancellor also announced that self-employed individuals earning above the Small Profits Threshold will get National Insurance credits even if they do not earn enough to pay income tax or NIC. However, LITRG highlights that sole traders will need to declare their profits on a Self Assessment tax return to benefit from these credits. (More)