Chancellor Rishi Sunak delivered his first Spring Statement to Parliament on Wednesday 23 March 2022, but how will it affect the recruitment industry?
Chancellor Rishi Sunak delivered his first Spring Statement to Parliament on Wednesday 23 March 2022, but how will it affect the recruitment industry?
From a cut in fuel duty to capital gains tax changes, the list of measures was wide ranging as the Government struggles to lessen the impact of rising prices. Fortunately, the experts at UHY have produced a helpful Spring Statement summary which is free to download here.
Here are the main points which will affect recruitment businesses:
National Insurance
There will be an increase in the annual National Insurance Primary Threshold and the Lower Profits Limit. To align the starting thresholds for income tax and National Insurance contributions (NICs), the threshold will increase from 6 July 2022 from £9,880 to £12,570.
The Lower Profits Limit is the point where the profits of the self-employed become subject to Class 4 NICs. From 6 April 2022 the limit rises to £11,908 and from 6 April 2023 it increases further to £12,570.
From April 2022 the Health and Social Care Levy Act provides for a temporary 1.25% increase to both the main and additional rates of Class 1, Class 1A, Class 1B and Class 4 NICs for 2022/23. From April 2023, the NIC rates will revert back to 2021/22 levels and will be replaced by a new 1.25% Health and Social Care Levy.
Income tax
The basic rate of income tax for non-savings, non-dividend income for taxpayers in England, Wales and Northern Ireland will fall to 19% from April 2024.
Fuel duty
In response to the rising prices at the pumps, the Spring Statement saw a reduction of 5 pence per litre to fuel duty for petrol and diesel. This took effect from 6pm on 23 March 2022 and will remain in place for 12 months.
Employment Allowance
From April 2022 there will be a welcome increase of £1,000 to the allowance for eligible employers to reduce their employer NICs by up to £5,000 per year. The allowance can only be claimed against one PAYE scheme, even if a business runs multiple schemes.
Personal tax
The personal allowance currently stands at £12,570 and will be frozen for the tax years to 2025/26. Regarding company dividends, the first £2,000 are chargeable to tax at 0% (the Dividend Allowance). For 2022/23 and subsequent tax years the rate at which dividends received above the Dividend Allowance are taxed has increased across all rates by 1.25% to the following rates:
• 8.75% for basic rate taxpayers
• 33.75% for higher rate taxpayers
• 39.35% for additional rate taxpayers.
Corporation Tax
The main rate is 19% for the financial year beginning 1 April 2022, and will increase to 25% for the years beginning on 1 April 2023. A small profits rate will be introduced for qualifying companies with no associated companies in the accounting period and profits of £50,000 or less, so that they will continue to pay CT at 19%.
Companies with profits between £50,000 and £250,000 will pay tax at the main rate reduced by a marginal relief.
Need help with your business finances?
If you have any questions regarding the Spring Statement, our experts offer real-time accounting, tax planning and business advice for those in the recruitment sector. Contact us on 0845 606 9632 or email hello@recruitmentaccountants.com
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