Spring Statement 2022

(2 minutes to read)

On Wednesday 23rd March 2022, Chancellor Rishi Sunak announced the Spring Statement – here’s what you need to know as a limited company contractor.

National Insurance Rise

With the cost of living rising at record levels, the announcement that NICs would be increasing as a ‘Health and Social Care Levy’ in order to help the NHS recover from the pandemic came as another blow to all workers – especially those in the self-employed sector already struggling financially.

There were hopes that this might be scrapped in the Chancellor’s statement, however, it remains in place meaning that from the 6th of April 2022 an extra 1.25% will be added to National Insurance.

The employers NI is increasing to 15.05% (previously 13.8%) and the employees NI is increasing to 13.25% (previously 12%).

The only change is that there will be a £3,000 lift in thresholds from July, meaning the level at which workers start to pay NI will rise from £9,800 to £12,750.

The Chancellor stated that this will save some tax payers an extra £330 a year.

However, this won’t be a help to everyone, especially limited company contractors earning above the new thresholds. For those in this position, it is likely that they will choose to take home a larger salary to reduce the amount of dividends.

Employment Allowance

The maximum Employment Allowance will be increasing from £4,000 to £5,000 from April. Those who are eligible (businesses and charities where employer’s Class 1 NI liabilities were less than £100,000 in the previous tax year) will be able to claim a greater reduction on their secondary Class 1 NI liabilities, and from the 2023 to 2024 tax year onwards, their Health and Social Care Levy liabilities.

Income Tax

Another promise made by Rishi Sunak was a cut in income tax, reducing it by 1p.

However, this won’t come into effect until 2024.

This news has been met with some cynicism as the change will, perhaps conveniently, come into play just before the next election.

Fuel Duty

With many contractors needing to travel to work, the announcement of a cut in fuel duty will come as a relief.

The five pence per litre cut came into effect as of the 23rd of March at 6pm.

Although this has been welcomed and will of course be a help to most people, it has been argued that the Chancellor could have done more and reduced the cut further.

What else do I need to know?

With the end of the tax year approaching, here are some other changes that you need to be aware of:

Dividends

The annual dividend allowance will remain at £2,000, however dividend tax rates are increasing from the 6th of April.

  • Basic rate – 8.75% (was 7.5%)
  • Higher rate – 32.5% (was 33.75%)
  • Additional rate – 39.35% (was 38.1%)

Entrepreneurs Relief

This will change its name to Business Asset Disposal Relief – it means that you’ll pay tax at 10% on all gains on qualifying assets.

We hope you found this page helpful. If you have any further questions, our team of experts are available to answer any queries, so give us a call on 01442 795 100 or email jaime.thorpe@dolanaccountancy.com.

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Why Dolan Accountancy?

Dolan Accountancy was set up by Simon J Dolan, the man behind the well-known brand SJD Accountancy. With over 25 years experience in the contracting marketing, Dolan Accountancy has the heritage, reputation and credibility you can trust. Working closely with our sister company, Contractor Umbrella, it means we can offer one low cost, fixed fee package at £105 + VAT per month. This gives you the flexibility of using both our Limited Company Accountancy Services and our award winning Umbrella Service, for one inclusive cost. We don’t believe in tiered packages or hidden extra fees, instead we aim to give you everything you need, including:

  • Free Company Formation – This is where it all begins. Once you have decided on an available name, we will form your company free of charge (if using our accountancy services) and it will be ready for you to use in as little as three hours.
  • Free use of Contractor Umbrella – With changes in Public Sector IR35 Legislation we understand that sometimes you are required to contract via an umbrella company. We will keep your limited company ticking over, while you work margin free via our sister company, Contractor Umbrella.
  • A Dedicated Accountant – Your accountant will be there for any company or personal tax advice that you require. We will never outsource work, even to internal teams.
  • Free Access to FreeAgent – The founder behind the multi award winning FreeAgent platform was one of Simon’s first clients, therefore it only seems fitting that we offer all of our clients access to FreeAgent, free of charge.
  • Free Business Banking – We have decided to waive our commission so our clients can use Tide free of charge for the first year.
  • Unlimited IR35 Status Reviews – We will review all of your contracts for IR35 purposes and provide you with our professional opinion as to its status.
  • Free Registered and Director’s Service Office Address – Sometimes you just don’t want your home address on display at Companies House. When you sign up to our accountancy services, we will offer the use of our address as an alternative.
  • Your Business and Personal Taxation Needs – This includes Company Accounts, Director’s Personal Tax Return, VAT Returns, Payroll, Corporation Tax and Dividend advice, to name just a few.
  • Same day payments- We offer same day payments as standard providing funds are received into our account by 9am, for no additional fee.

If you’d like to find out more about how Dolan Accountancy can help you and your business, please give us a call on 01442 795100 or email sophie.lewis@dolanaccountancy.com or jaime.thorpe@dolanaccountancy.com.

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