Taxation

The Chancellor set out a three-part Tax Plan for a ‘lower tax economy’ which will
cover the remainder of the Parliament. The key elements of the plan are:

● The Spring Statement forms the first part of the plan – prioritising help for
families with the cost of living – through the fuel duty cut (previously
detailed) and an increase in National Insurance thresholds:
The Chancellor announced an increase in the annual National Insurance
Primary Threshold and the Lower Profits Limit from £9,880 to £12,570
from July 2022, to align with the Income Tax personal allowance. This is a
tax cut of over £6bn and worth over £330 for a typical employee in the
year from JulyIn addition, from April 2022, self-employed individuals with profits
between the Small Profits Threshold and Lower Profits Limit will continue
to build up National Insurance credits but will not pay any Class 2 NICs

● The second part of the plan is entitled ‘Capital, People and Ideas’ and
focuses on creating the right conditions for private sector led prosperity
through growth and productivity. The government intends to work with
industry over the remainder of 2022 and will announce its conclusions in
the Autumn Budget

● In a tax break worth over £5bn a year, the final part of the Tax Plan,
entitled ‘Sharing Growth’, confirms a cut in the basic rate of Income Tax
from 20% to 19% in England, Wales and Northern Ireland in 2024. The
Scottish government will receive their share of this funding which can be
used to cut taxes or increase spending.

As part of the Tax Plan, the Chancellor has reaffirmed plans for tax reform to
make the tax system ‘simpler, fairer and more efficient.’ This will be done by
continuing the review of over 1,000 tax reliefs and allowances in the tax system
by 2024.

Key allowances
No changes were made to personal tax allowances for the forthcoming 2022/23
tax year, which include:
● Inheritance Tax (IHT) nil-rate band remains at £325,000 and the residence
nil-rate band at £175,000, until April 2026
● Capital Gains Tax (CGT) annual exemption remains at £12,300 for
individuals and £6,150 for most trusts
● Lifetime Allowance for pensions remains at £1,073,100 until April 2026,
the Annual Allowance remains at £40,000
● New single-tier State Pension will increase to £185.15 per week in April
2022, the older basic State Pension will increase to £141.85 per week
● Individual Savings Account (ISA) allowance remains at £20,000 for the
2022/23 tax year
● Junior Individual Savings Account (JISA) allowance and Child Trust Fund
(CTF) annual subscription limits remain at £9,000
● Most National Insurance contributions (except for certain employee
categories and Class 2 self-employed) and Dividend Tax rates will increase
by 1.25 percentage points from April 2022.
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