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Spring Statement: Spinning into the new tax year

Posted on 6 April 2022

In early preparation for the new tax year on 6 April 2022, the Chancellor, Rishi Sunak, announced his Spring Statement on 23 March.

Income tax and NICs

The Chancellor announced that the annual primary threshold (currently £9,568) and lower earnings limit (currently £8,840) for national insurance contributions (NICs) would be increased to the equivalent of the income tax personal allowance of £12,570 from July 2022. Sunak also announced that the basic rate of income tax would be reduced to 19% from April 2024.

Taken in isolation, these two measures might appear to reduce the level of tax on lower earnings levels. However, when taken together with the already planned 1.25% increase in the rate of NICs in April and ongoing freeze of the income tax personal allowance, from April 2024, the measures are not quite so virtuous.

In April 2023, the 1.25% NICs increased will be replaced by the "health and social care levy", to be levied at the same rate.

In taking with one hand and giving with another, a director at the Chartered Institute of Taxation (CIOT) has commented that, "Keeping up with all these swings and roundabouts will make most ordinary taxpayers dizzy."

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