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ICAEW responds to 2022 Spring Statement

Author: ICAEW

Published: 23 Mar 2022

Commenting on tax, Frank Haskew, Head of Tax, ICAEW, said:

“This is the start of another round of tax changes that we’re going to see over the coming months.

“With his new tax plan, including the rise in the NIC threshold and the one per cent reduction in the income tax rate from April 2024, the Chancellor appears to be effectively undoing some of the changes he introduced with the Health and Social Care Levy. The government will be giving away a significant proportion of the Levy it will be raising, a somewhat puzzling approach to tax policy which calls into question why the Levy was introduced in such a hurry in September 2021. 

“We’re pleased that National Insurance Contributions and income tax thresholds will align. This move will particularly benefit those at the lower end of the pay scale and simplify the tax system too. The £1,000 increase in the employment allowance to £5,000 will also be well-received by SMEs, and is expected to benefit around a half a million smaller businesses.”

Commenting on public sector, Alison Ring OBE FCA, Public Sector and Taxation Director for ICAEW, said:

“The story of the Spring Statement is inflation, which is driving a sharp fall in living standards and is causing the interest bill on public debt to multiply. The government has responded with a package of measures that the OBR estimates offset about a third of the decline, but this still leaves household budgets exposed to the effect of rapidly rising prices. The Chancellor’s focus on building up fiscal resilience suggests he may be trying to preserve some firepower for possible further interventions later in the year.

“With public finances in a better shape than previously forecast, the Chancellor will hope that he is going to be able to make good on his pledge to cut income tax in 2024.”