Spring Statement 2022
A summary of the key contents
The Spring Statement was not meant to be a March mini-Budget, despite what many headlines in the days before suggested. Mr Sunak believes in the once-a-year approach to major tax and spending changes, unlike some of his predecessors. However, in 2022, as in 2020 and 2021, events conspired to put paid to that single Budget aspiration. Instead, on the day the inflation rate was announced as having reached 6.2%, the Chancellor announced a range of tax cuts aimed at countering the cost of living crisis.
Several key allowances, including the personal allowance and higher and additional tax thresholds, capital gains tax, inheritance tax and pensions were frozen. In the current inflationary context, these freezes are tantamount to tax increases.
Against a background of rising inflation, the global effects of the war in Ukraine and an increased cost of living crisis, the Chancellor’s Statement on 23 March was a mixed bag. While failing to heed the calls of some of his backbenchers to relieve pressure on households by rescinding the hike in National Insurance (NI) contributions, Mr Sunak instead pegged the NI threshold to the personal allowance and announced a cut at the end of his speech. In an unusual pre-Budget unveiling of a specific tax move, the Chancellor announced that the basic rate of income tax will be cut from 20% to 19% from April 2024 for taxpayers in England, Wales and Northern Ireland.
Elsewhere the cut in fuel duty was welcomed, while measures to further alleviate the financial burden on individuals and businesses were also highlighted. As the new tax year dawns, and in the run up to a general election, there may be further surprises to come in the Chancellor’s Tax Plan when we face the next Budget in the Autumn.
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