We’ve prepared this brief summary of the 2022 Spring Statement with the items we hope will be of interest to clients of our firm – small businesses and individuals in Scotland. 

1. National insurance – The national insurance contribution threshold (NICs) for employees and the self-employed will increase to £12,570 from July 2022. This brings it in line with the UK personal allowance for income tax, and will mean a saving of around £330 over the year for a typical employee (Chancellor’s sums, not ours).

2. Owner managed businesses/investment income – Basic rate dividend tax will be increased to 8.75%. Higher rate dividend tax will increase to 33.75% additional rate dividend tax will increase to 39.35% (all increased by 1.25%).

3. National insurance – National insurance contributions will increase by 1.25% from the beginning of the 2022/23 tax year as planned. This is what is known as the Health and Social Care Levy.

4. Income tax – The basic rate of income tax will reduce to 19% from April 2024 (from 20%). As Scottish income tax rates are a devolved matter and are already slightly different from the rest of the UK this may have limited impact in Scotland – and a lot may change in two years.

5. Energy crisis – Fuel duty has been cut (since 23 March) by 5p per litre. This cut will last for 12 months. 

6. Sustainability & Environment – There will be no VAT payable on energy saving materials (solar, heat pumps, insulation etc.) from April 2022 to April 2027, and the number and range of eligible materials will be extended.

7. Small businesses – The Employment Allowance will be increased from £4,000 to £5,000 in April 2022, offsetting higher overall employer national insurance costs for small employers.

8. Investment – Improvements to the research and development (R&D) tax relief system will now support cloud computing costs. Generally, relief to be focused on R&D carried out in the UK.

9. Employment – The Apprenticeship Levy is to be reviewed, and its effectiveness in incentivising training opportunities to be evaluated.

10. Society – A further £500m is to be added to the Household Support Fund, of which £41m will be made available to the Scottish Government to distribute their own support fund.

The usual disclaimer – a guide like this shouldn’t be used as formal tax advice and is summarised so as to communicate basic points quickly.

If you have any questions, please contact David and the team.