A LEADING firm of Cumbrian accountants has responded to the Chancellor Rishi Sunak's Spring Statement unveiled yesterday.

Becky Bowness, Corporate Tax Partner at Armstrong Watson Accountants, Business and Financial Advisers commenting on the Spring Statement says: "With the economic impact of the war in the Ukraine still uncertain and inflation expected to reach 7.4% this year, we didn’t expect any significant tax announcements during the Chancellor’s statement, and perhaps we got slightly more than we anticipated.

"Despite the cries for support to working families and those on lower income given the cost-of-living crisis, we were prepared for Rishi’s stance on current tax increases to remain. However, whilst he confirmed his commitment to the Health and Social Care levy, the Chancellor did announce some key measures to ease the working families’ cost of living, with perhaps the increase in the National Insurance threshold and the commitment to reduce income tax the biggest surprises. The support for Business was less apparent though, and the focus was on consultation over the summer, with a view to cutting taxes and encouraging investment for business in the Autumn to be closely followed. Overall, there are some laudable plans to encourage growth and investment, but as always, the devil will be in the detail when it is released."

Armstrong Watson's agricultural department said while they welcomed the five pence per litre reduction in fuel duty effective from 6pm on March 23 it did nothing to alleviate the massive increases in the cost of red diesel in recent months.

'The Chancellor was under pressure to cancel the National Insurance increases of 1.25% effective from April 6 2022. He resisted this pressure but announced an increase in National Insurance thresholds from July 2022. This is the level of income an employee or self-employed person starts to pay National Insurance, and will be increased to £12,570 per annum, the same as the personal allowance for Income Tax. This produces an annual saving of about £330.

The Chancellor published a “Tax Plan” which sets out the changes he intends to introduce before the end of this parliament in 2024. Included in this is a pledge to reduce the basic rate of Income Tax by 1% to 19%.

The employment allowance is a relief which allows business operating a PAYE scheme to reduce the amount they pay to HMRC. Businesses with an employers’ national insurance liability of less than £100,000 per year, can currently deduct £3,000 from the amount they pay over to HMRC. This was due to increase to £4,000 in April 2022, but is being increased to £5,000.

Included in the Tax Plan are measures to consult on changes to the Research and Development Tax Credit, and Capital Allowances on equipment purchases. Further details of these should be published later in the year.

Andrew Robinson, Head of Agriculture at Armstrong Watson commented that "these measures are all welcome, but are a drop in the ocean compared to the massive increase in input costs faced by farmers in recent months."