In February we looked at the proposed changes and increases to living costs that the Government were considering bringing into effect. Since then, there have been further changes to key areas such as National Insurance contributions.
We are seeing unprecedented increases to fuel, energy, and food, and from 1 April 2022, a 1.25 percentage point will be added to national insurance contributions paid each by employee, employer and the self-employed.
On 23 March 2022, the Chancellor of the Exchequer announced an economic plan to help businesses and individuals deal with these rising costs, confirming that:
- The national insurance threshold will be increased by £3,000 to £12,570. This matches the income tax threshold.
- Fuel duty has been cut by 5p per litre, and will remain in place until March 2023.
- Local authorities will be given double the amount in funding to the household support fund and it will be for each local authority to target those in need the most when managing the funds.
- For businesses operating in the retail, hospitality, and leisure sectors, a 50% discount in business rates will be given, up to the value of £110,000.
- For small businesses, the employment allowance that is in place to reduce the annual national insurance liability and which is currently up to £4,000 will be increased to a maximum of £5,000.
These new measures all come into force at different times over the coming weeks. , and on top of these measures, a further announcement to be brought in before the end of this parliament, in 2024, is that the basic rate of income tax will be cut from 20p to 19p in the pound, which it says will affect 30 million people.
If you need any help with managing your people strategy or with your Payroll, please don’t hesitate to contact us and speak to a member of the team.