A Spring statement isn’t a budget, but this Spring statement felt like a mini budget in terms of the immediate announcements that will come into effect and also those that will be happening in a few months’ time.
What has been in the Chancellor’s favour has been the strength of the UK economy with its recovery from the pandemic. However, inflation is at a 30 year high and is expected to top out at 8.75% in the 4th quarter.
The immediate temporary 5p cut in the fuel duties for a period of 12 months will be welcomed by individuals and businesses alike. In addition to this and to assist with the rising energy prices, there has been confirmation that there will be now a 0% VAT charge on energy saving materials and instalment in the home, so this will allow for a reduced cost for households and may provide the construction industry with additional work.
For employers there is good news in that the Employment Allowance will be increased to £5,000 from April 2022, and this is expected to reward up to 500,000 small businesses.
In addition, it has also been announced that from July 2022 the starting rate for the payment of national insurance will be increasing to £12,570, which his of course the same level as the personal allowance, this will not only affect employees, but also the self-employed as well. There will also be confirmation of a reduction in the Class 2 payments for low earners. I am sure that this will lead on to many conversations between us and our business clients in the near future.
For all businesses the annual investment allowance has been confirmed at £1 million until 31 March 2023, and this will benefit all businesses when making capital investments into plant and machinery, although it is again important to ensure that the timing of such is beneficial to you.
Finally, and something that affects Limited Companies only is the beneficial Research and Development relief, which has been discussed on many occasions as being one of the most underused reliefs, but also one of the most beneficial reliefs to business. There is going to be major reforms to this relief which will come into effect from April 2023, however the benefits of this relief shouldn’t be forgotten now, and perhaps this is also something that you may wish to consider further.