As part of the plan to boost growth and productivity across the UK, the government have set out plans to incentivise firms to train more, invest more, and innovate more through cuts to tax
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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 it was announced this would be rising by £1,000 from £4,000
- 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, 670,000 businesses will not pay NICs and the Health and Social Care Levy due to the Employment Allowance
Green Technology exemption
- 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:
- They have announced 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.
- They will be engaging with business organisations & others interested from now until Autumn.
These announcements boost the existing business support package, which includes:
- From April 1, and as announced in Autumn Budget 2021, eligible businesses can receive temporary business rates relief worth almost £1.7 billion.
- Freezing the business rates multiplier for another year.
- Introducing the temporary super-deduction. 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 .
- Extending the transitional relief for business rates and supporting small business schemes for 2022-23. 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.
Our CEO, Conor Shaw, says: “While the increase in the National Insurance threshold from July won’t resolve the recruitment crisis facing hospitality, it has the potential to ease the challenge facing operators trying to cover shifts.”
For further information, download the full 2022 Spring Statement here.