The UK’s Spring Statement 2022 was delivered on 23 March 2022.
National insurance contributions
From July 2022 the annual National Insurance Primary Threshold for Class 1 contributions (employees) and the Lower Profits Limit for Class 4 (self-employed) are to be increased from GBP 9,880 to GBP 12,570, aligning the thresholds with the income tax personal allowance.
From April 2022 self-employed individuals with profits falling between the Small Profits Threshold and the Lower Profits Limit will not need to pay any Class 2 national insurance contributions (NICs) but will continue to build up national insurance credits.
Employment Allowance
The Employment Allowance, which gives eligible employers a deduction from their national insurance bill, is to increase from GBP 4,000 to GBP 5,000 per year with effect from April 2022.
R&D tax relief
In the autumn budget in November 2021 the UK government outlined details of measures to reform the research and development (R&D) tax relief including expansion of qualifying expenditure to cover data and some cloud computing costs. Further detail has now been announced.
Legislation will be introduced to ensure that R&D carried out by businesses based in the UK can continue to qualify for R&D tax relief where there is a material or regulatory requirement for the relevant work to be undertaken abroad.
All cloud computing costs associated with R&D within the scope of the relief will be covered, to enable companies to claim relief for costs of storing important data. The scope of qualifying expenditure is also being extended to include all mathematics. This will provide further support to sectors such as artificial intelligence, quantum computing and robotics. The measures are to come into effect in April 2023.
Consideration will be given to increasing the research and development expenditure credit (RDEC), to make the relief more internationally competitive. The government is also looking at measures to combat the abuse of R&D tax reliefs, particularly in the SME scheme. Further announcements are expected in the autumn.
Share option plan
At the time of the 2020 Budget, a review was launched of the Enterprise Management Incentive (EMI) scheme, to ensure it was providing the intended support for high-growth companies to recruit the staff they require, and to examine the possibility of widening access to the scheme. The government considers that the current EMI scheme is still effective and appropriately targeted. The scope of the review is now to be extended to look at the Company Share Option Plan, to consider the possibility of reforming the scheme to support companies that have grown beyond the scope of the EMI.
VAT relief for energy saving materials
With effect from April 2022, wind and water turbines will be added to the list of energy saving materials (ESMs) eligible for VAT relief, and complex conditions for eligibility will be removed. A temporary zero rate will be introduced for the installation of ESMs.
Business rates
Measures announced in the autumn budget relating to relief from business rates (local property tax) for certain green expenditure are to be brought forward and will commence from April 2022.
Personal income tax
The basic rate of income tax is to be reduced by one percentage point to 19% from April 2024, provided that the government’s specified fiscal principles are met in future.
Fuel duty
The duty on petrol and diesel is to be reduced by 5p per litre for twelve months, with effect from 23 March 2022.
