The Chancellor’s spring Statement 2022 set out the Government’s tax plan to support the UK economy, businesses and families in both the short and the medium term.

The key measures the Chancellor announced as part of the plan include:

 

• ‌‌‌an increase to the National Insurance Primary Threshold for Class 1 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.

 

• a reduction in the basic rate of income tax to 19% for England and Wales from April 2024.

 

• with effect from 6 April 2028, the earliest age at which most pension savers can access their pensions without incurring an unauthorised payments tax charge will increase from 55 to 57.  The pension lifetime allowance will remain at its current level of £1,073,100 until April 2026.

 

• the Capital Gains Tax annual exempt amount (after personal allowance) is frozen at £12,300 for individuals and £6,150 for trusts.

 

• The tax-free dividend allowance is unchanged at £2,000.  The dividend tax rates are increased by 1.25% for each category of taxpayers for 2022/23.

 

• The Corporation Tax rate will remain at 19%, but from April 2023 the applicable Corporation Tax rates will be 19% and 25%.  Businesses with profits of £50,000 or below will still only have to pay 19% under the small profits rate.

 

• Making Tax Digital (MTD) for ITSA will be introduced by 6 April 2024.  This impacts sole traders and landlords, with income over £10,000.  General partnerships will not be required to join MTD for ITSA until 6 April 2025.

 

• All VAT-registered businesses must register for MTD from April 2022.  The VAT registration and deregistration thresholds will not change for a further period of two years from 1 April 2022.  The reduced rate of VAT of 12.5% ends on 31 March 2022 for the hospitality sector, returning to the standard rate of VAT of 20% from 1 April 2022.

 

• trading losses will have more flexibility to carry them back over three years.  This applies only for losses incurred by companies for accounting periods ending between 1 April 2020 and 31 March 2022, and for individuals for trade losses of tax years 2020/21 and 2021/22.

 

• The lifetime limit on gains eligible for Entrepreneurs’ Relief is £1m for qualifying disposals.

 

• SMEs applying for R&D tax credits will be eligible to a maximum of £20,000 in repayments per year plus three times the company’s total PAYE and NIC liability.

 

• The Business Rates multiplier will be frozen in 2022/23.  Eligible retail, hospitality, and leisure businesses will also benefit from a new temporary 50% Business Rates Relief.

 

• The nil-rate band of Inheritance Tax (IHT) remains at £325,000, frozen until 2026.

 

Whilst there was little help for directors in the Spring Statement, if you would like any assistance with regards dividend administration etc, please do not hesitate to contact me.

 

Please be assured, once again, that we are only a phone call away, and please get in touch if we can be of any assistance.

 

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