With inflation taking hold of the UK economy and the costs of running a business rising, Chancellor Rishi Sunak has announced measures which aim to combat the difficulties you may face over the coming years.

Now the Coronavirus Act has expired, the relief package that went along with it is no longer available for businesses across the country. As trusted advisors, we’re here to give you the answers on how any changes may affect you.

What the Spring Statement means for you

It’s no secret that small businesses were some of the worst affected by the COVID-19 pandemic, with many having to shut their doors to adhere to social distancing laws. Now, with the rising costs of energy bills and recruiting staff, we know it’s becoming more expensive to keep your business running.

In his statement, the Chancellor announced that a tax cut would be put in place for business rates. The business rates multiplier will be frozen from this year until 2023 and will be worth £4.6 billion over the next five years.

Eligible retail, hospitality and leisure businesses will also be able to benefit from a temporary 50% business rates relief worth £1.7 billion. This means that, if you’re an eligible pub with a rateable value of £21,000, for example, you could save £5,200.

To keep businesses’ staff levels, the Government will also be subsidising 95% of apprentice training for businesses that don’t pay the apprenticeship levy, helping SMEs to recruit and train employees at a top tier standard. 

There will also be an increase in the Employment Allowance of £1,000 per employer, meaning businesses can reduce their National Insurance contribution (NICs) bills by up to £5,000 a year. The cut will make room for more money to be spent on employing new members of staff and giving you the support you need.

Tax and NICs

One of the biggest announcements from the Spring Statement was that the NICs threshold would be raised by about £3,000 – meaning contributions start once an employee reaches the £12,570 limit, as of July this year. This aligns the primary threshold and the lower profits limit with the income tax personal allowance.

While there’s no denying that an increase in the NICs threshold will affect businesses, with the additional funds for employment allowance, there’s hope that the extra costs could level out.

With that being said, the 1.25% uplift in National Insurance, part of the health and social care levy, has now started. As of 6 April, class 1 primary and secondary NICs, class 1a and 1b and class 4 NICs will have to pay the extra. Certain employees will be exempt from this:

  • apprentices under the age of 25
  • all employees under the age of 21
  • veterans
  • new employees in freeports.

The levy will be deducted when using Pay-As-You-Earn (PAYE) directly from employee payslips.

If your business relies on transport, you could also benefit from the fuel duty cut which has lowered the price of petrol and diesel by 5p per litre. The price decrease will be frozen over the next year and represents a saving of £5 billion a year.

Improvements and reforms will also be carried out on how businesses invest with R&D spending. Tax relief will help to support costs for cloud computing and data and will allow you to claim on R&D supported by pure maths.

Over the next few months the Government will be consulting on how future reforms to business investment taxes will be carried out ahead of the Autumn budget.

What comes next

Although the plans from the Government seek to improve everyone’s situation, there are still steps you can personally take to ensure your business reaps the benefits. As professionals, we’re here to help you.

Get in touch today to find out more.