As a business owner, government statements should be of keen interest, and the Spring Statement 2022 is no different.
Yes, they include things for almost everyone, but with your company’s growth hinging so much on external factors, being prepared is the least you can do.
This article will take you through the key points of the Spring Budget Statement 2022 for business owners and other professionals, and how these changes could impact you.
Business Taxes
For those at the smaller end of SMEs, the Chancellor announced that the threshold at which employers can claim back money they’ve paid in Employment Allowance will rise. It will increase from £4000 to £5000, as of the 2022/23 tax year.
Also, the government are bringing forward two sets of rate relief by a year. One of these means no rates are due on a range of green technologies used to decarbonise buildings. The other means eligible heat networks will receive 100% rates relief.
The remainder of the Chancellor’s remarks on business taxes referred to previously announced relief of 50%, due to begin on 1 April 2022 and end on 31 March 2023. This measure for hospitality, retail and leisure businesses is capped at £110,000 per business.
What it means for your business
If you’re not in the categories mentioned above – i.e hospitality, or a business actively investing in decarbonising your premises – the Chancellor’s announcements effectively gives you a £1000 tax cut (and that’s only if you’re a smaller business.) On a wider scale, the increase in Employment Allowance will positively impact half a million small businesses according to the government. 50,000 businesses will also be taken out of paying National Insurance due to the rising threshold.
VAT
Again, the new measures announced for VAT were very industry-specific – with the scrapping of VAT for 5 years only covering companies installing green home improvements.
What it means for your business
With that in mind, all other VAT rates and rules remain the same. The VAT threshold will stay at its current level of £85,000 until the end of March 2024.
The biggest recent change affecting all businesses has been Making Tax Digital becoming a legal requirement for all VAT-registered businesses as of April 2022.
Want to learn more about Making Tax Digital? Read our blog post on it here!
Research and Development (R&D)
Research and development tax credits are a government incentive, rewarding UK companies for investing in innovation. Any business that’s spending money in this area can claim the credits in the form of a cash payment and/or a Corporation Tax reduction.
Though more details of the addition are to be announced, we know that from April 2023, businesses can claim R&D tax credit relief on the storage of their most important data, and their pure maths research.
What it means for your business
Research and development might seem like something only science and technology fields can take advantage of, but all sectors can benefit. From waste management to wineries, the incoming changes to R&D tax credit is a great excuse to start looking into the help you can get with your innovation from the government.
Transport for business
As business and everyday transport often overlap, this was an area with a lot of new announcements!
Fuel duty cut
This was the headline announcement of the Spring Statement: from midnight on 22nd March 2022 to 22nd March 2023, the government will cut fuel duty to 5p a litre. This means the they will take less of the money spent on fuel – down to almost 53p in every pound. Similar cuts are also happening for other fuel types, like liquefied petroleum gas and road fuel natural gas.
Though 5p might not seem like a lot, it’s actually one of the biggest cuts to fuel duty on record. To give you some context, the last major cut to fuel duty was in 2011, and that was only 1%.
Other measures
Aside from this, the Chancellor also reiterated several other measures that were first announced in his Autumn statement:
- Road tax increases from 1st April 2022.
- Company car fuel benefit: this tax is for employees who have been given a company car and free fuel to use in personal hours. The multiplier that’s used to calculate it will increase to £25,300.
- Company car tax stays frozen at its current level unti 2024/5.
- HGV road tax is frozen for 2022/23, and the government is also suspending the HGV Levy for a year from August 2022.
What it means for your business
Most obviously, these announcements will lead to cheaper transport and logistics costs; the government estimates that savings from the fuel duty cut will be £200 for your average van driver, and £1500 for your average haulier.
However, there has been some criticism that the cut in fuel duty will be effectively cancelled out by the rising cost of living and other worldwide events.
There might not have seemed to be much for businesses in the Chancellor’s Spring Statement, but there was a lot of priming for potentially bigger announcements in the Autumn budget. We’ll be sure to keep you posted!
If you want to read a full summary of the Spring Statement, click here.
Speak to PKF Smith Cooper Systems about how to make sure you’re ready for any upcoming changes, including Making Tax Digital. Contact on 01332 959 008 or use our enquiry form.
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