Spring Budget 2022: Business Support

30th March 2022

On 23 March 2022, the Chancellor of the Exchequer, Rishi Sunak delivered the Government’s Spring Budget 2022 in the face of a global cost of living crisis and war within Europe.

With high inflation, spiralling fuel and energy costs, a significant level of economic uncertainty and the impending increase in employers’ National Insurance, businesses were hoping that the Spring Statement would provide significant levels of support.

We have detailed below the range of measures for post-Covid business recovery and set out the changes which will have the largest impact to SME’s.

Cutting fuel duty on petrol and diesel by 5p per litre for 12 months

The cut takes effect from 6pm on 23 March 2022
This the largest cut across all fuel duty rates ever
This cut, plus the freeze in 2022-23, represents a £5 billion saving over the next 12 months worth around:

i. £200 for the average van driver

ii. £1,500 for the average haulier

Increasing the Employment Allowance from £4,000 to £5,000

Employment Allowance is a relief which allows eligible businesses to reduce their employer National Insurance contributions (NICs) bills each year
At Spring Statement the Government announced this would be rising by £1,000 from £4,000 to £5,000
Around 495,000 businesses (30% of all businesses) will benefit from this increase, including around 50,000 businesses (3% of all businesses) which will be taken out of paying NICs and the Health and Social Care Levy entirely
In total, this means that from April 2022, 670,000 businesses will not pay NICs and the Health and Social Care Levy due to the Employment Allowance

Bringing forward an exemption on business rates for green technology

Making green technology, including solar panels and heat pumps, exempt from business rates from April 2022 will save businesses an extra £35 million in 2022-23, and is expected to be worth around £170m over the next five years to support the decarbonisation of buildings
A 100% relief for eligible low-carbon heat networks which have their own rates bill will also be available
This is on top of reducing the VAT on energy savings materials (ESM) from 5% to 0%, further incentivising homeowners to buy ESMs from businesses as part of a wider package of Government measures targeted at improving energy efficiency

Reforming R&D tax credits to help drive innovation

From April 2023, business will be able to claim relief on the storage of their vital data and pure maths research
This is set to boost sectors where the UK is a world-leader, including AI, robotics, manufacturing, and design
Draft legislation will be published this summer

Planning to encourage greater business investment once the super-deduction ends in 2023:

A series of potential policy changes to the UK’s existing capital allowances regime, which the government will consider ahead of April 2023
These policies will aim to encourage business investment once the super-deduction ends to drive forward productivity growth

Boosting the existing business support package, which includes:

From 1 April 2022, and as announced in Autumn Budget 2021, eligible businesses will now be able to receive a temporary business rates relief worth almost £1.7 billion, the biggest single-year cut to business rates in 30 years (outside of emergency Covid reliefs)
Freezing the business rates multiplier for another year saving businesses £4.6 billion over the next 5 years
Introducing the temporary super-deduction, the biggest two-year business tax cut in modern British history. Under the super-deduction, for every pound a company invests, their taxes are cut by up to 25p
Increasing the Annual Investment Allowance to £1 million – the highest level of support for capital expenditure ever provided through the AIA and a generous incentive to invest for over a million SMEs, providing full expensing for all SMEs
Extending the transitional relief for business rates and supporting small business schemes for 2022-23, which will restrict bill increases from between 15% to 25% for SMEs. The extension of these schemes is estimated to save businesses £30 million, protecting small businesses from significant bill increases before the 2023 revaluation
Establishing Help to Grow, which is giving SMEs the tools they need to innovate, grow, and help drive our economic recovery. As a result of the scheme 90% of survey respondents have made changes or are planning to make changes to the way they manage, organise or operate their business

Implementation – Key Dates:

March 2022 – Fuel duty cut on petrol and diesel by 5p per litre, from 6pm on 23 March 2022
April 2022 – Increasing the Employment Allowance – cutting taxes on small businesses by up to £1,000, by raising the Employment Allowance from £4,000 to £5,000
July 2022 – Aligning the annual National Insurance Primary Threshold and Lower Profits Limit with the income tax personal allowance, making the first £12,570 of earnings tax free
April 2023 – Cutting taxes on business investment – by reforming Capital Allowances and R&D tax reliefs
April 2024 – Cutting the basic rate of income tax from 20% to 19%