Your Guide to the Spring Statement

• Fuel duty: There is a temporary 12-month cut to duty on petrol and diesel of 5p per litre, which came into effect on 23 March 2022. Whilst this appears to be good news, in an environment of sharply rising costs, it may be prudent to review business motoring strategy. Unincorporated businesses, for example, might want to revisit any decision to claim flat-rate expenses rather than a percentage of total running costs in their accounts. Employer arrangements with employees may also need consideration.

• Employment Allowance: Employment Allowance is a relief allowing eligible businesses and charities (including community amateur sports clubs) to reduce their employer Class 1 national insurance contributions (NICs). It increased from 6 April 2022 to £5,000 (previously £4,000).

• Zero rate of VAT for energy saving materials (ESMs): The Spring Statement introduced a time-limited zero-rate of VAT for the installation of certain types of ESMs in residential accommodation in Great Britain until 31 March 2027. It also permanently brings wind and water turbines back into scope of the relief in Great Britain. It was applied from 1 April 2022 and runs for five years,
  when the current 5% reduced rate of VAT will apply again.

• Capital allowances regime: The Annual Investment Allowance (AIA) was due to reduce from £1,000,000 to £200,000 on 1 January 2022. This reduction has been delayed until 1 April 2023. This is now aligned with the 130% super deduction which is due to end on 31 March 2023.

• Research and Development (R&D): The definition of R&D for tax reliefs is expanded by clarifying that pure mathematics is a qualifying cost. The government confirmed that all cloud computing costs associated with R&D, including data storage, will also qualify for relief. It is expected that these changes will take effect from April 2023.

We would be pleased to advise further if this is of relevance to you. Please contact us.