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Rishi Sunak announces employment allowance increase and improved R&D tax breaks

 
 
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What might the 2022 Spring Statement mean for your business?

Chancellor Rishi Sunak’s Spring Statement includes measures that the UK government says are aimed at boosting investment, innovation and growth. Those of key interest to startups and small businesses include:

  • Increase to Employment Allowance

  • GreenTech rate reliefs brought forward

  • Improvements to R&D relief

Employment Allowance

The chancellor announced a £1,000 increase to Employment Allowance that will benefit around half a million smaller businesses. The change allows smaller businesses to reduce their employers National Insurance contribution (NIC) bills each year – from £4,000 to £5,000.

HM Treasury stated that the cut will be worth up to £1,000 for half a million smaller businesses and would start on 6 April. The move will mean 50,000 of these businesses will be taken out of paying NICs and the Health and Social Care Levy.

Green technology

The Chancellor also announced that two new business rates reliefs will be brought forward by a year to come into effect in April 2022. There will be no business rates due on a range of green technology used to decarbonise buildings, including solar panels and batteries. Eligible low-carbon heat networks will also receive 100% relief. These measures are intended to save businesses more than £200 million over the next five years and are on top of reducing the VAT on energy savings materials (ESM) from 5% to 0%.

R&D reliefs

The Chancellor also announced a commitment to improving R&D reliefs. HM Treasury reports that UK business R&D investment is less than half of the OECD’s average as a percentage of GDP. The reformed R&D tax reliefs are intended to “deliver better value for money for the taxpayer while being more generous where they can make the most difference”. The scope of reliefs will also be expanded to cover data, cloud computing and pure maths. HM Treasury said that draft legislation will be published this summer.

Further detail of the announcements is expected from HM Treasury

Sources:

https://www.gov.uk/government/news/chancellor-announces-tax-cuts-to-support-families-with-cost-of-living

https://www.gov.uk/government/publications/spring-statement-2022-business-support-factsheet

 



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