Chancellor of the Exchequer Rishi Sunak leaves 11 Downing Street for the House of Commons to deliver his Spring Statement on March 23, 2022 in London, England. (Photo by Leon Neal/Getty Images)

Chancellor Rishi Sunak on Wednesday set out a series of business support measures in his Spring Statement.

This includes a £1,000 increase to Employment Allowance to benefit around half a million SMEs. The relief, which allows smaller businesses to reduce their employers National Insurance contributions bills each year, has been increased from £4,000 to £5,000.

The cut is worth up to £1,000 for half a million smaller businesses and starts in two weeks’ time, on 6 April. As a result, 50,000 of these businesses will be taken out of paying NICs and the Health and Social Care Levy, taking the total number of firms not paying NICs and the Levy to 670,000, the Treasury said in a statement.

The Chancellor also announced two new business rates reliefs will be brought forward by a year to come into effect in April this year. There will be no business rates due on a range of green technology used to decarbonise buildings, including solar panels and batteries, whilst eligible heat networks will also receive 100% relief. Together these are expected to save businesses more than £200 million over the next five years.

Sunak also reduced the VAT on energy saving materials such as solar panels, heating pumps and roof insulation from 5 per cent to zero for five years.

The Chancellor said he will examine how the tax system – including the operation of the Apprenticeship Levy – can be used to encourage employers to invest in adult training.

The support for SMEs comes on top of 50% business rates relief for eligible retail, hospitality, and leisure properties, also coming in this April and worth £1.7 billion for small businesses.

Responding to the Spring Statement, Helen Dickinson, chief executive of the British Retail Consortium, welcomed the review into Apprenticeship Levy.

“We are heartened to hear that the Chancellor has heard our concerns and is set to examine whether the Levy could be improved, to allow businesses to invest in the right training,” she said. “We urge him to introduce measures which allow high-quality short courses in functional skills, allow Levy funds to cover associated training costs, and allow a wider range of courses to be supported.”

She however added that the business rates burden needs to be addressed to increase investment by retail businesses.

“Currently, retail businesses pay 25% of all business rates, despite accounting for 5% of the economy. The announcement of a 50% relief is a welcome help to small businesses but will have little impact on the industry’s £8 billion business rates bill. Better news was given through the announcement that the ‘green investment relief’, that supports environmental property improvements, will be brought forward. This will support the investment the industry is making to become net zero by 2040, ten years ahead of the government target,” she commented.

Sunak confronts cost of living crisis

Sunak also unveiled several measures to help household finances, including a cut on fuel duty and easing the tax burden for the lowest earners.

He announced that National Insurance starting thresholds will rise to £12,570 from July. The cut, worth over £6 billion, will benefit almost 30 million working people with a typical employee saving over £330 in the year from July.

Sunak also announced that fuel duty for petrol and diesel will be cut by 5p per litre from 6pm tonight (23 March) – a tax cut worth £2.4 billion. This is the biggest cut ever on all fuel duty rates and means a one-car family will now save on average £100.

The basic rate of income tax will also be cut by 1p in the pound in 2024, when the Office for Budget Responsibility expect inflation to be back under control, debt falling sustainably and the economy growing. The cut is worth £5 billion and will be the first cut to the basic rate in 16 years.

Sunak said: “This statement puts billions back into the pockets of people across the UK and delivers the biggest net cut to personal taxes in over a quarter of a century.

“Cutting taxes means people have immediate help with the rising cost of living, businesses have better conditions to invest and grow tomorrow, and people keep more of what they earn for years to come.”

Sunak also announced that there will be an extra £500 million for the Household Support Fund, which doubles its total amount to £1 billion to support the most vulnerable families with their essentials over the coming months.

This cost of living support comes on top of the measures that the Chancellor has already announced over the recent months.

Sunak last month unveiled a package worth £9 billion targeted at helping 28 million poorer and middle-income households with energy bills in particular.

Household incomes are set to shrink further in April owing to a planned tax hike on all UK workers and businesses to fund care for the elderly.

The same month, a cap on domestic gas and electricity bills will be increased, in line with rebounding wholesale energy costs.

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