What Sunak’s Spring 2022 Budget Announcement Means For Your Business

Published - Mar 29, 2022

It has been a tough few years for UK businesses. We have been hit with a number of political and societal events that have devastated the economy and left little room for recovery. First there was Brexit, then Covid-19, and now the Ukraine-Russia conflict. With consumer unease and businesses feeling the pinch, many looked to the Spring 2022 Budget announcement for some relief.

There are a lot of opinions out there about Rishi Sunak’s Spring 2022 Budget which was announced on the 23rd of March. But debate aside, what does the Spring Budget mean for your business? Well, there are 5 main provisions for businesses.

1. 1. Employment Allowance will be increased to £5,000
2. 2. National Insurance threshold has risen to £12,570
3. 3. Fuel duty will be cut by 5p per litre
4. 4. R&D tax credits will be revised
5. 5. Income tax will be reduced to 19% in 2024

Employment Allowance

Rishi Sunak announced that he will raise the Employment Allowance from £4,000 to £5,000. Eligible businesses will be able to reduce their National Insurance payments by £5,000, relieving some of the burden of the previously announced National Insurance rate increases.

National Insurance

In addition to the increase in the Employment Allowance, the Chancellor increased the National Insurance threshold from £9,570 to £12,570. This helps business owners and employees on a personal level but also reduces the employer-matched National Insurance contributions.

Fuel Duty

In order to combat the significant fuel price hike caused by Brexit and the Ukraine-Russia war, the government is implementing a fuel duty. Fuel prices have risen on average 30p per litre in the last few weeks. The fuel duty will not make a huge difference to many people and businesses, but it will take a bit of the sting out of the increase.

Research and Development Tax Credit

Rishi Sunak has yet to give any details about the change to R&D tax credits, so we are unable to give much information at this time. So far, the Chancellor has announced that they will review the research and development tax credit in order to increase innovation and productivity amongst UK businesses. The Chancellor believes that the R&D tax credit is key to boosting the UK economy.

Income Tax

In 2024, income tax will be reduced from 20% to 19%. While this may not directly affect businesses, it will mean some extra money back in the pockets of consumers. The government has been unable to commit to implementing the change to income tax any earlier than 2024, citing the extra strain on the budgets after Covid-19. This is one of the first times the government has announced a change like this in advance. Usually, they prefer not to be locked into decisions like this.

How Will I See The Advantage In My Business?

The good news is that you don’t have to lift a finger in order to see the benefits of these changes. You will see the benefits through a lower tax bill. Your accountant and bookkeeper will automatically make adjustments as they go.

In need of bookkeeping and accounting services for your business? Talk to us about how we can take the stress out of business finances.

Posted in Finance on Mar 29, 2022