Spring budget debrief, part 2: What are the not-so-obvious changes?
In our previous article, we looked at the major headlines announced in the recent Spring Statement, including changes to national insurance and the planned income tax cut (coming in 2024). But what about the not-so-obvious changes – those things that attracted much less attention but may still impact business owners? Let’s take a quick look.
Employment allowance increase
For smaller businesses with employees, the amount you can claim against your employers’ Class 1 national insurance has increased from £4,000 to £5,000 as of April 2022. It’s good news for the roughly 500,000 eligible businesses who will now be able to reduce their national insurance contributions.
What about business rates?
The 66% discount on business rates for retail, hospitality and leisure businesses ended on 31st March, and has been replaced with a 50% relief. (There’s a cap of £110,000 per company.) Rishi Sunak also confirmed that a thorough reform of business rates will be announced in this autumn’s budget, with changes to take effect in April 2023. For high street businesses struggling with soaring rates, it’s going to be another long year.
End of discounted VAT for the hospitality sector
To combat the impact of COVID lockdowns, the government had reduced VAT for hospitality businesses all the way down to 5% in 2020, before upping it to 12.5% in October 2021. Many in the hospitality sector were hoping the VAT discount would continue, to help hospitality businesses get back on their feet, but it was not to be; as of April 2022, the rate reverts back to the full 20%.
Other things on the horizon
The chancellor also pointed to other potential reforms that may be announced in the autumn budget, including a reform of research and development tax credits. In order to boost innovation in the UK, it’s likely that the government will make R&D tax relief more generous.
Also up for review is the Apprenticeship Levy (introduced in 2017 to encourage employers to take on apprentices), with the government looking at more flexible ways to bring apprentices into the workforce. Watch this space for further announcements later in the year.
It’s not always easy to tell how tax changes will impact your finances, but Jupp Castle is here to help. We’ll work with you to implement changes (for example, updating your accounting practices), minimise the impact on your finances, and boost the overall health of your business. Discover more benefits of working with us.
(Photo by Gary Bendig on Unsplash)
