Chancellor Rishi Sunak’s Spring Statement this week will be of interest to many Britons as the cost-of-living crisis worsens. As housing costs continue to increase, many are looking to the government for new policies to help them manage their budgets. Already, earnings are being squeezed in ways that many people haven’t seen before, and growing costs of living indicate that things will get worse before they get better.
The Spring Statement will be delivered on Wednesday, and we’ve compiled a list of possible announcements for businesses below.
National Insurance increase?
The 2021 Autumn Budget revealed a new 1.25 percent health and social care tax, which would raise class 1 and 4 national insurance rates and employer payments by 1.25 percentage points starting in April 2022.
While business leaders, Labour, and some Conservative MPs have called for a delay in the levy, the Guardian reported that Treasury insiders rejected this notion.
Most people’s tax payments may therefore go up starting in the following month. Employed workers earning £30,000 will have to pay an additional National Insurance payment of over £214 as a result of this change.
Fuel Duty cuts
In light of historically high fuel costs, hauliers have requested the government to maintain the current freeze on fuel duties for an additional two years. Due to Russia’s invasion of Ukraine, the average price of fuel has surpassed £1.60 a litre.
As a result of fuel prices reaching their highest level in eight years during the Autumn Statement, a scheduled increase in fuel duty was cancelled.
Road Haulage organisations have also asked the government to postpone the forthcoming restrictions to usage of untaxed red diesel for a year.
VAT
Businesses in the hospitality industry are urging the government to keep VAT at 12.5% rather than increase it to 20% in April. As a result of growing household expenditures, they believe, people are already hesitant to go out for a treat and hospitality firms don’t need the added strain of higher VAT and a loss in sales to worry about.
Energy Costs
A letter from the FSB to the chancellor has been published, in which it urges him to utilise the business rates system to assist small businesses with their energy expenses and to start an initiative to promote on-site renewable generation.
Steelworkers staged a demonstration outside Parliament on March 15 to highlight the danger to the country’s manufacturing sector.
Increasing energy prices have forced production to halt, endangering the livelihoods of workers, and they are pleading with the government for immediate assistance.
Dividend tax
By raising dividend taxes by 1.25 percentage points during COVID, the Chancellor hopes to fill up part of the hole in government finances.
Capital Gains Tax
Some believe that the Chancellor may decide to lower the capital gains tax exemption threshold, which was originally locked until 2026 and generated £10.6 billion last year.
By lowering the threshold to £6,000, the Office for Tax Simplification estimates that an extra £480 million in tax revenue would be generated.
If you’re worried about any of these impending changes, please get in touch with us so we can support you and your business at enquiries@aitaccountants.co.uk
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