FinanceChancellor’s Spring Statement 2022- with a Week to Go Blick Rothenberg’s...

Chancellor’s Spring Statement 2022- with a Week to Go Blick Rothenberg’s Newsroom is Now Open

The 2022 spring statement will be presented to Parliament by the Chancellor of the Exchequer on Wednesday 23rd of March

Blick Rothenberg will be producing commentary and analysis before, during and after the announcements are made. We will also be running our Statement newsroom, which can provide the following for the media:

Pre-Statement commentary – our experts can give their predictions for what the Chancellor might do and suggestions for what he should or shouldn’t do.  * Please find initial commentary below

  • A presenter “buddy” – a Blick Rothenberg expert to sit with a presenter during the announcement and comment on and/or interpret what the Chancellor is saying. This can of course be done remotely
  • Commentators for evening news rounds – TV and radio stations may require comment from our experts on what the Chancellor’s announcements will mean
  • Clinics (blogs or live Q&A) – our experts are on hand to answer readers’/listeners’/viewers’ questions on issues that they are concerned about or don’t understand following the announcement
  • Specific tax tables – to be discussed in advance of the Statement and produced for you on the day to show how different groups are affected
  • Twitter sessions – post-Statement providing answers to followers’ questions
  • Tax calculator – an interactive online calculator, that can be branded, which allows users to see how the announcement will affect them

On Statement Day, Wednesday 23rd March we will provide:

  • Immediate comment during the announcement on issues that the Chancellor raises
  • Assistance with deciphering technical detail
  • Interviews with financial experts on the announcements

To follow our commentary on social media please visit our Twitter page at @BlickRothenberg.Our media trained experts are on hand to assist with anything stated above.  If you would like an interviewee for Statement Day, access to our tax calculator, require an editorial preview or require technical assistance in deciphering the announcements or specific comment or there are other ways in which we may be able to help please call

David Barzilay – T: 07860 322 333  Email: david@barzilay.co.uk

Or

Dan Gray – T: 0207 544 4891 Email Dan.Gray@Blickrothenberg.com

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Stuart Proudfoot – T: 07968 180432 Email: stuart.proudfoot@Blickrothenberg.com

 

If you wish to receive  our  tax calculator or specific tax tables then please contact Michael Bolton

Telephone – T: 0207  544  8811  Email: Michael.Bolton@Blickrothenberg.com

 

* Pre-Statement commentary Blick Rothenberg

 

Overview from Heather Self, Partner

  • The energy price impact is huge.  In February the Chancellor announced a package of support totalling £9bn, which was a big number and about half of the expected extra costs to households (£18bn).  But expected impact is now £43bn so more needs to be done, but very expensive
  • Inflation also significantly higher – being forecast to rise to 8% over the next year (vs 3.1% last autumn).   This hits households but also government spending (especially public sector wage bill)
  • Pressure on Defence spending. More is likely to be given to Ukraine, at least in short term although our overall defence spending is relatively high internationally already
  • Projected growth is still poor and has fallen from projections last Autumn
  • Yet again, the Chancellor is facing a major economic shock (Ukraine, and oil prices) so there is huge uncertainty in his decision-making process

Possible measures:

  • National Insurance rise likely to go ahead.  The logic for it is still there – need to support NHS and social care.  It could be delayed for a year, but then that makes it harder to do later, the economic outlook is not great next year either.   Also, it is (fairly) progressive as it does not hit poorest and rises with income.  There is also a practical point – it will have been baked into payroll software ready for 5 April – It would cause a lot of disruption to pull it now –
  • Benefits may be uprated by more than originally planned.   Uprating by 8% instead of 3.1% e.g., for Universal Credit would do a lot to support poorest.  He could also reinstate the £20 “temporary” uplift to UC but that would mean going back on a previous political decision
  • Might get a temporary zero rating of VAT on domestic fuel.  Would cost £2.4bn and it’s not well-targeted. People with big houses get more benefit but it would be relatively easy to do (and probably popular politically).
  • Probably not major tax changes, as those are likely to become permanent in response to what could be a temporary shock?

Overall, there will be a lot of pressure for the Chancellor to take short term measures to help households.  But if we are going to be poorer in the long term, because of inflation and long-term higher energy prices) then we cannot all be protected for ever – we are going to be poorer.  The question then becomes how to share the pain, both over the population, protecting the poorest/hitting those who are better off) and over time.

It is looking increasingly hard for the Chancellor to be able to cut taxes pre-Election.  He has got a tough year ahead – as have we all.

Heather Self

Telephone: 0207 544 8752 Email: heather.self@blickrothenberg.com

Overview from Nimesh Shah, CEO

The Chancellor has quickly become a veteran of delivering a fiscal statement under the backdrop of a crisis.  It’s easy to forget that Rishi Sunak has only been in the job for a little over 2 years and he has had to deal with more challenges during that tenure than the lifetimes of his predecessors.

Despite the backdrop of the war in Ukraine, the cost-of-living crisis and the impending increase to National Insurance, the Chancellor is unlikely to use his Spring Statement to make any dramatic changes around tax and spending.  The Spring Statement should be a simple update on the current state of the UK economy, but there is pressure for the Chancellor to respond to the current situation.

The Government has been clear that the 1.25% National Insurance will be going ahead, so a late U-turn is highly unlikely, even though it would be popular and ease some of the cost pressures on working families.

The Chancellor will be under pressure to do more on rising energy prices, even though he announced a package of support costing £9 billion only last month.  It’s likely that this support will be extended, but any calls to reduce VAT on domestic fuel will be rejected.

Big announcements on taxation can be largely dismissed as the Chancellor has committed to returning to the ‘normal’ Budget cycle now, but there will be the usual wave of consultation documents following the Spring Statement, which will give an insight on what the Chancellor is thinking for the future.  Remember, this is a Chancellor that ‘wants to cut taxes’ but his hands are tied for foreseeable future.

Nimesh Shah

Telephone: 0207 544 8746

Email: Nimesh.shah@blickrothenberg.com

General Commentary

Income Tax

  • The Health and Social Care Levy (“HSCL”) should be deferred for at least another year. Inflation is going to increase because employees will naturally want to ask for higher wages which will in turn lead to companies increasing their prices and the spiral continues. The Government should give people time to deal with the rising energy (and other) costs. Paul Haywood-Schiefer, Senior Manager
  • Given rising cost in living, the Government should reintroduce a version of mortgage interest relief at source (MIRAS).  Stefanie Tremain, Director
  • Similarly, the Government should re-visit mortgage interest relief for landlords given rising cost of living and the risk of these costs being passed onto tenants (increased rents and increased utilities) especially where mortgage interest rates rise. Stefanie Tremain, Director
  • The Government should remove the unfair Child Benefit charge. At the very least they should raise the threshold in line with the basic rate band (the threshold is now less than the basic rate band).  Stefanie Tremain, Director
  • Families with one earner, earning over £50,000 can ill afford to lose Child Benefit amid rising costs of living Paul Haywood-Schiefer, Senior Manager
  • In Spring 2021 the Chancellor froze personal tax bands between 2022 and 2026 representing a stealth tax on income inflation. With inflation now running at over 5% the Chancellor should revisit whether that freeze is unduly severe and the end date brought forward to 2023 or 2024.. David Hough, Partner

Tax Administration

  • The Government should announce a HMRC campaign to target fraudulent claims associated with COVID assistance.  The general population is furious at having to absorb higher NIC, etc when the suggestion is that HMRC is currently planning not to pursue many millions that have been “mis-claimed”. Fiona Fernie, Partner
  • Delay the introduction of Making Tax Digital (MTD) and the proposed basis period reform – HMRC are clearly not ready for this. Suzanne Briggs, Partner
  • Make investment into and improvements to HMRC customer and agent services. Suzanne Briggs, Partner

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