Against a backdrop of the ongoing pandemic, the invasion of Ukraine and ensuing economic uncertainty Rishi Sunak unveiled his ‘mini budget’ on Wednesday 23 March. Peter Webb, our Head of Tax Advisory, takes a look at the announcements.
At this year’s Spring Statement the UK Chancellor warned us that pain cannot be avoided. The tax burden, the effective amount of tax we all pay, is now set to hit its highest level since the second world war.
Spring Statement 2022
Missed the announcements? Read a full summary here
Very few measures were announced to ease the burden of impending increases in energy bills except for the scrapping of VAT on energy saving measures and a boost to the housing support fund that helps struggling families. The headline here is a 5p reduction in fuel duty which will be a welcome measure.
Rishi Sunak had already announced an increase in National Insurance contributions from 6 April 2022. The calls for the increase to be scrapped went unheeded but the Chancellor did announce a large increase in the threshold at which employees start paying NI contributions which will be increased by GBP3,000 to GBP12,570. This measure effectively halves the amount the government will collect from the increase.
Rishi Sunak usually has a rabbit to pull out of his hat. This time around it was a big headline grabbing announcement to reduce the basic rate of tax by 1p in the pound by 2024, retaining his credentials to be a conservative tax cutting Chancellor. It’s doubtless a measure that will be re-announced as good news in the intervening budget statements before then.