We’ve unpicked the Spring Statement, announced by the Chancellor on 23 March, to share the top five takeaways for micro, small and medium-sized builders.
1. VAT reduction on energy efficiency improvements to homes
The Chancellor announced that energy efficiency products, like insulation, heat pumps and solar panels, will be available to consumers at 0% VAT when installed. For a time-limited period of five years, the labour charge will also be 0% VAT. This change will commence on 1 April.
This means that when a consumer wants to have a product, like insulation, fitted you will charge them 0% VAT on the product and labour for that work. By reducing the cost of installation, the policy has been designed to encourage greater numbers to commission projects that install energy saving measures to their homes. Summary details on this scheme can be read here.
2. Cut to fuel tax
This is a simple change; it means that the tax applied to petrol and diesel is cut by 5p per litre for 12 months. The cut took effect from 6pm on 23 March 2022. This may make filling up at the pump slightly cheaper, but with the cost of fuel fluctuating you may find it has limited impact if prices on fuel go up.
3. Skills still on the agenda
The Government has committed to improve the UK’s skills system, by pushing for greater numbers of employers to train up staff. This means measures will be introduced to incentivise more businesses to play their part in training the next generation of tradespeople. One element of the system that the Government has committed to look into is the Apprenticeship Levy. The announcement also noted that Government is committed to establishing Help to Grow, which is giving SMEs the tools they need to innovate.
4. Tax contributions
The level at which people start to pay National Insurance (NI) contributions, is increasing from £9,880 to £12,570 in July. The change to NI will be the same as employees, for the self-employed in the 2022-23 tax year. However, NI payments are increasing in April. These changes may mean you pay less per year in NI contributions, but it could be more, depending on your income. Government also announced it will cut the basic rate of income tax by 1p, from 20p to 19p in April 2024.
5. Where was red diesel delay?
You may have been aware that the FMB and other organisations had been calling for the delay to measures that stop builders using red diesel in machinery. We had hoped this measure would be included in the Spring Statement. Unfortunately, this wasn’t announced and will present a rise in costs for builders. See our Q&A which will help you plan for this change.
