The 2022 Spring Statement has been announced by The Chancellor Rishi Sunak, but how will affect you, your business, and the industry?
Below we discuss the most relevant key points to come from the Statement:
One of biggest announcements for the industry came from the Government’s decision to cut the 5% VAT for homeowners on energy saving technologies such as solar panels, heat pumps or insulation. Now that homeowners no longer have to pay VAT on these materials for the next five years it should help to support the transition towards decarbonising UK homes and meeting net zero targets.
This decision is a welcome one for the industry, but many still worry that the VAT cut may not be enough to allow many households the privilege of affording the installation of a heat pump or solar panels.
There are also concerns around whether the tax relief includes the labour costs associated with installing materials as usually this is a major part of the cost for homeowners.
2. National Insurance
To the dismay of many the planned 1.25% increase in national insurance contributions will remain and come into place on 6th April, however, the national insurance threshold is still set to be increased from £9,600 to £12,570.
Income tax thresholds will also rise so you will be able to earn up to £12,570 a year without paying income tax. Sunak also announced that the basic rate of income tax would be cut from 20% to 19% in 2024.
This will actually only positively affect those who earn up to around £35,000 as those earning any more will end up paying more in tax than they do currently, those who earn below this amount will be better off after July as pay will dip slightly before then due to the new levy and before these changes come into place.
There is also an increase in the Employment Allowance, which gives relief to smaller businesses’ national insurance payments. The allowance will increase from £4,000 to £5,000 from April. This is a positive move for the industry as we see a lot of small businesses that will now benefit from that extra £1000 boost.
These tax changes will ultimately have a knock-on effect for your business finances so it will be worth keeping a closer eye on your accounts whilst these changes are being made.
3. Apprenticeship levy
As part of the statement Rishi Sunak said that looking forward to the Autumn budget, he would be reviewing the Apprenticeship Levy in order to encourage investment in skills. The skills shortage within the industry has been a problem for a while and this is set to continue, if the Government can help ensure that training scheme and apprenticeships are properly funded then it encourages more people to take this route into a plumbing or heating career.
Alongside this it was announced that the Government will cut tax rates on business investment in the Autumn. This tax break could help to ease the burden of hiring workers, training the workforce, and increasing wage costs.
4. Fuel duty
One of the bigger announcements was that fuel duty will be cut by 5p a litre. On average, van drivers could save around £200 on fuel costs as a result of these cuts so this is a win for our industry.
Overall, most of the things outlined in the Spring Statement are quite positive and will be welcomed from the industry. There is an encouraging push for employers to train more staff which will tackle the skills shortage and there is a tax relief on renewable technologies to encourage the installation in homes across the UK, but many still believe that more could have been done to support the industry regarding the overall rise in living costs, mainly the increase in energy costs and essential raw materials.
What are your thoughts on this years Spring Statement? We’d love to hear them.