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Spring Statement 2022: Your summary of the key points

EG Accountancy - Your Trusted Cookstown Accountant.

The Chancellor, Rishi Sunak, delivered his Spring Statement on 23 March. Faced with the task of creating a ‘strong economy’ for the UK, against the challenging background of high inflation, rising costs and the threat of conflict in Europe, he announced a raft of new measures.

So, what was in the Spring Statement for your business? And how will these announcements, government measures and new initiatives affect the business landscape in the coming year?

The challenge of creating a stronger UK economy

As we head into the second quarter of 2022, your business is facing a demanding economic landscape. Inflation is at a 30-year high, currently measured at 6.2%. There are significant supply chain issues to contend with. And fuel, energy and labour costs are increasing, leading to 73% of UK firms planning to raise their prices to cover rising costs.

What most UK businesses want is action from the government to ease these pressures. So, did the Chancellor’s mini-budget live up to these expectations?

Investment, innovation and growth

The Chancellor and the Office for Budget Responsibility (OBR) predict that the UK economy will grow by 3.8% this year. Projections are then for growth of 1.8% in 2023, and then 2.1%, 1.8% and 1.7% in the following three years. The OBR also now predicts that inflation will hit 7.4% by the end of the year. That’s a big hurdle to any kind of meaningful recovery.

What’s needed to counter this demanding economic landscape is a clear focus on growth and productivity for UK businesses. So, did the Chancellor announce the measures that will truly deliver this growth and innovation? There are measures here to support this aim, but it’s likely to be a slow and steady kind of growth.

Key measure announced include:

  • Employment Allowance – the Employment Allowance allows smaller businesses to reduce their employer National Insurance contributions bills. This allowance will rise from £4,000 to £5,000 from April this year. The cut will be worth up to £1,000 for half a million smaller businesses and starts in two weeks’ time.
  • Business rates – to support the decarbonisation of non-domestic buildings, the government is introducing targeted business rates exemptions for eligible plant and machinery used in onsite renewable energy generation and storage, and a 100% relief for eligible low-carbon heat networks with their own rates bill.
  • VAT change – 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.
  • Capital allowances – the current super-deduction scheme offers an enhanced capital allowance on qualifying purchases of equipment and assets. This super-deduction will end in March 2023, but the Chancellor indicated that the Government wants to offer more help around capital investment for UK businesses. The Government will work with businesses and other stakeholders to consider cuts and reforms that will support future investment.
  • Employee training – UK employers spend half the European average on training for their employees. This lack of qualifications is affecting our innovation and productivity. The Chancellor said he intends to make use of the tax system – including the operation of the Apprenticeship Levy – to encourage employers to invest in adult training.
  • R&D Tax Credits – R&D reliefs play a big part in encouraging research and development (R&D) and innovation. UK business R&D investment is less than half of the OECD’s average as a percentage of GDP. To tackle this shortfall, R&D tax reliefs will be reformed to deliver better value for money for the taxpayer. The scope of the available R&D reliefs will also be expanded to cover data, cloud computing and pure maths, to broaden the eligibility to a wider range of businesses, sectors and development.
  • Other measures – The Help to Grow: Management and Help to Grow: Digital schemes were also highlighted by the Chancellor as evidence of their commitment to provide support for enterprise. And the rise to £1 million for the Annual Investment Allowance will also help support businesses that are looking to invest in their future success.

Helping hard-working people

The Chancellor acknowledged the need to support hard-working families and business as part of this statement. He reinforced the Government’s and Parliament’s support for the people of Ukraine in the Ukrainian/Russian war. But he also made it clear that this commitment to providing support may well begin to impact on the UK’s own economy, in time.

However, the Chancellor does have a plan for combating the cost-of-living crisis. Mr Sunak wants to take a ‘principled approach to cutting taxes’ and to be disciplined in making decisions that will build a stronger economy. He set out the framework for this ambition with a new three-point plan for taxation.

The Government’s plan is intended to:

  1. Support families with the cost of living
  2. Provide the conditions for growth
  3. Share the profits of this growth fairly

Measures to support this include:

  • Rise in the NIC threshold – the Government will raise the threshold for the amount people can earn before they pay National Insurance. From July, people will be able to earn £12,570 a year without paying a penny of income tax or National Insurance.
  • Cut to fuel costs – fuel duty has been cut by 5p from 6pm on 23 March 2022. This will help to cut fuel costs for many workers who are paying over the odds when commuting. It will also lower the pressure of rising fuel costs for businesses and their fleets.
  • Planned cut to basic rate income tax – the Chancellor was adamant that he wants to cut income tax to help those on lower and middle incomes. He stated a promise to drop the basic rate of income tax from 20% to 19% from April 2024. This will mean a cut in tax costs for many workers from 2024 – as long as the economic conditions allow it.
  • National Living Wage and Minimum Wage – don’t forget that the National Living Wage and National Minimum wage are both increasing from 1 April 2022. You can find the new rates for all age groups here.

Talk to us about the impact of the Spring Statement

There’s no simple way to overcome the UK’s economic issues at a stroke. A wealth tax may have been a more immediate solution for raising public funds quickly – as was suggested by the Shadow Chancellor, Rachel Reeves, in her response. But the Chancellor has taken some positive, practical steps to tackle the cost-of-living crisis in this Spring Statement.

If you’d like to talk through the potential impact of the Spring Statement for your business, please do get in touch. We’ll help you work any incentives and tax reliefs into your financial planning, so you set the best possible foundations for 2022 and beyond.

Read a full breakdown of the Spring Statement from BBC News

Get in touch to discuss the Budget.

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Capital Gains Tax 60-day reporting rule – What you need to know!

EG Accountancy - Your Trusted Cookstown Accountant.

Since 6th April 2020 HMRC have made significant changes to how capital gains on the disposal of property are reported and when applicable tax is due to be paid.

You now have 60 days to file a return with HMRC AND pay any tax due on the disposal (for completion dates after 27th October 2021). Prior to this you only had 30 days.

Does this apply to me?

If you have tax to pay on this disposal then Yes. In the following situations preparing a computation showing that there is no tax due should be suffice.

  • The gain is covered by reliefs such as main residence relief.
  • Residential Property sale has resulted in a loss.
  • Losses brought forward available to cover this gain in full.
  • Your annual exemption (£12,300 for 2021/22) covers this gain (and any earlier gains made in the same tax year).

What do I need to do?

You will need to set up a government gateway account and a capital gains tax account online. The taxpayer must do this, however, please feel free to reach out to us and we can assist with videos of the steps to follow.

Once your online accounts have been set up your accountant can prepare the computation and complete the return on your behalf. HMRC will ask you to authorise them to act for you.

It is essential to contact your accountant as soon as possible. You will need details from the purchase of the property and any costs of improvements made, even possibly valuations, and with the tight turnaround time of 60 days we would advise to have this information together even before the completion date.

Late reporting and payment of tax will result in penalties and interest.

Things to note.

  • A separate return will be required for each disposal (unless you have more than one completing on the same day).
  • The disposal still needs to be reported on the annual Self – Assessment Tax Return.
  • This information is based on the sale of UK residential property.
  • This information is for UK residents – different rules will apply for non-residents.
  • It is not just the sale of a property that can trigger a capital gain but transfers by way of a gift or a transfer at undervalue.
  • The tax due could change once your full income for the tax year is known– as this return is being prepared during the tax year the tax rate used is really an estimate.

If you are thinking of selling a property, or you are further along the journey and would like to discuss in more detail please feel free to reach out to us.

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Financial Resolutions For A Successful 2022

EG Accountancy - Your Trusted Cookstown Accountant.


Welcome to our brand new website!
At EG Accountancy Services, we want to provide you with the professionally tailored financial services you need to run a successful business. Over the last few weeks, we’ve been working hard behind the scenes to streamline our website so that you can find exactly what you need when you need it. We hope you love it and look forward to working with you to achieve your 2022 business goals! 

Financial Resolutions For A Successful 2022

The beginning of a new year is the perfect time to create financial resolutions that will not only help your business prosper but simplify your life in the process. When deciding on these resolutions, it’s important to consider those that are worthwhile, achievable, and aligned with your future financial goals. Keep reading for some ideas.

1. Review Your Business Plan, Targets & Budgets

A well-prepared business plan is crucial to your success, keeping you organised and on track while also serving as a valuable tool to showcase your organisation to potential investors.

The beginning of a new year is an excellent time to revisit and update your existing business plan using the latest financial data, goals, marketing ideas, strategies, and more so your business will continue to expand in 2022.

A good place to start is to review your business strategy, financial targets, and budgets. Doing so will help with the identification of any potential opportunities for growth as well as any potential issues.

2. Identify Key Tax Dates & Deadlines

With all of the work that comes with running your own business, it can be easy to forget about key tax dates. 

Missing the deadline for filing your tax return or paying your tax bill late can result in a substantial penalty, fees, and interest charges on top of the tax you already owe. It goes without saying that this sort of financial pressure can be detrimental to both you and your business, so it’s worthwhile marking these dates on your calendar early in the year. 

If you find keeping track of these deadlines overwhelming or are confused about what exactly you need to declare, feel free to reach out to us.

EG Accountancy Services has extensive experience dealing with tax-related matters, including Corporation Tax Return, Self Assessment Tax Return, VAT, and Payroll. 

3. Consider Outsourcing 

As a business owner, chances are you often find yourself responsible for managing every aspect of your business, especially in the beginning. Stepping away from this role and allowing someone else to take the lead can be particularly challenging, but it’s important to remember that your time as a business owner is valuable. Investing in help can take some of the pressure off you, and having extra skills on-demand is likely to increase your chances of business-related success.

Perhaps you find keeping on top of your financial accounts difficult, are uncertain about the trajectory of your marketing efforts, or are unsure about HR-related matters. In these cases, you could consider hiring an accountant like those found at EG Accountancy Services, a qualified marketing manager, or a HR professional. We work closely with a number of trusted professionals in these fields and would be more than happy to connect you with them. Just drop us a message, and we will get back to you.

When considering which tasks to outsource, think about those that you struggle with most as well as those that are particularly time-consuming and take it from there.

4. Automate Your Processes

We are surrounded by technology every day, but many business owners aren’t taking full advantage of its benefits. Automated processes such as those found in accounting software can both cut down on the chances of human error and free up you and your team’s schedules, allowing you to focus on driving sales and tackling important tasks.

At EG Accountancy Services, our services are tailored to your needs. Together we will work to navigate the complexities of your finances and help you achieve your New Year business goals, whatever they may be. If you have a query or just want to have a quick chat about how we can help your business, please free to reach out to us.