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Series of measures to support businesses announced at Spring Statement 2022

Finance Growth Hub 3/23/2022 12:00:00 AM

Three priorities: Capital, People and Ideas.

The Chancellor announced a series of measures to support businesses at Spring Statement 2022, building on measures announced at at Autumn Budget and Spending Review 2021.

This Spring Statement set out plans to create a new culture of enterprise, which will support sustainable growth by focusing reforms of the tax and regulatory system on three priorities: Capital, People and Ideas.

The full list of the Spring Statement measures that will benefit UK businesses can be found below:

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 we 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

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:

  • We 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

  • We will be engaging with business organisations and other interested parties from now until the Autumn

These announcements boost the existing business support package, which includes:

  • From April 1, 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

Table 1: Implementation

New Spring Statement measures Comes into effect Applies to
Fuel Duty cut 6pm Weds 23/03 UK-wide
Increasing the Employment Allowance April 2022 UK-wide
Business rates relief for green technology April 2022 England only
R&D tax relief April 2023 UK-wide
O% VAT on Energy Savings Materials (ESM) April 2022 GB-only*
Changes to Capital Allowances regime April 2023 UK-wide**