Rishi Sunak delivered his Spring Statement on 23rd March, amidst a backdrop of the rising cost of living and the atrocities of the war in Ukraine.
Within his speech, Mr Sunak set out his Tax Plan which aims to “help families with the cost of living, support growth in the economy, and ensure the proceeds of growth are shared fairly”.
The Statement itself was fairly light on specific changes to tax laws, although we anticipate further changes will be announced in the Autumn Budget, following a period of consultation.
Below we set out some changes, together with some aspects that were already known.
Read a brief summary of our initial views of the Spring Statement here.
Employer provided cars
The scale of charges for working out the taxable benefit for an employee who has use of an employer provided car are normally announced well in advance. Most cars are taxed by reference to bands of CO2 emissions multiplied by the original list price of the vehicle. The list price is reduced for capital contributions made by the employee up to £5,000.
For fully diesel cars generally add a 4% supplement unless the car was registered on or after 1 September 2017 and meets the Euro 6d emissions standard.
The maximum charge, irrespective of the fuel, is capped at 37% of the list price of the car.
The rates announced for 2022/23 will remain frozen until 2024/25.
Employer provided fuel benefit
From 6 April 2022 the figure used as the basis for calculating the benefit for employees who receive free private fuel from their employers for company cars is increased to £25,300.
Employer provided vans and fuel
For 2022/23 the benefit increases to £3,600 per van and the van fuel benefit charge where fuel is provided for private use increases to £688.
Changes to the van benefit charge from April 2021 mean that if the van cannot in any circumstances emit CO2 by being driven the cash equivalent is nil.
National Insurance contributions (NICs)
From April 2022 the Health and Social Care Levy Act provides for a temporary 1.25% increase to both the main and additional rates of Class 1, Class 1A, Class 1B and Class 4 NICs for 2022/23.
From April 2023 onwards, the NIC rates will revert back to 2021/22 levels and will be replaced by a new 1.25% Health and Social Care Levy.
Broadly, the new Health and Social Care Levy will be subject to the same reliefs, thresholds and requirements as NIC. However, the Levy (as opposed to the temporary increase in NICs for 2022/23) will also apply to those above State Pension age who are still in employment or are self-employed.
Existing reliefs for NICs to support employers will apply to the Levy. Companies employing apprentices under the age of 25, all people under the age of 21, veterans and employers in Freeports will not pay the Levy for these employees as long as their yearly gross earnings are less than £50,270, or £25,000 for new Freeport employees.
The Employment Allowance, which reduces employers’ Class 1 NICs by up to £5,000, will also be available to reduce the employers’ liability to the Levy.
National Living Wage (NLW) and National Minimum Wage (NMW)
Following the recommendations of the independent Low Pay Commission, the government will increase the NLW for individuals aged 23 and over by 6.6% from 1 April 2022. The government has also accepted the recommendations for the other NMW rates to be increased.
From 1 April 2022, the hourly rates of NLW and NMW will be:
- £9.50 for those 23 years old and over
- £9.18 for 21-22 year olds
- £6.83 for 18-20 year olds
- £4.81 for 16-17 year olds
- £4.81 apprentice rate for apprentices under 19, and those 19 and over in their first year of apprenticeship.
Read more about the Spring Statement
David Robinson
As a Tax Partner, I advise clients on all aspects of UK tax, ranging from business taxes, transactions and private client matters, helping to achieve the objectives and aspirations of businesses and their owners.
View my articlesTags: Spring Statement 22
