Budget 2022 Summary

Taxation

Employment allowance increases by £1000 to £5000 from April 2022 with small business able to reduce their annual National Insurance liability by £5000.

The basic rate of income tax would be cut from 20% to 19% in 2024. Sunak said it would not be responsible to make a tax cut right now, given the uncertainty in the economy.

The income threshold at which point people start paying National Insurance will rise from the current £9,568 to £12,570 in July, a saving for employees worth over £330 a year

The planned 1.25-percentage-point rise in national insurance contributions  from April 2022 will remain, as a dedicated funding source for health and social care.

Living costs

The OBR forecast that inflation would average 7.4% this year with the economy expected to grow by 3.8% this year.

Fuel duty will be cut by 5p per litre until March 2023.

Homeowners installing energy efficiency materials such as solar panels, heat pumps, or insulation will see VAT cut on these items from 5% to zero for five years.

Local authorities will get another £500m for the Household Support Fund from April, creating a £1bn fund to help vulnerable households with rising living costs.

Other

The government will reform R&D tax credits so that “they’re effective and better value for money”.

The 130% super deduction introduced at Spring Budget 2021 is due to expire on 31 March 2023. Various potential options to enhance the capital allowances regime from April 2023 are being considered.



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