The Chancellor Rishi Sunak announced today in the Spring Statement a series of new measures, some happening now and others in the future, to tackle the rising cost of living in the UK and economic uncertainty in the face of rising inflation rates (expected to reach 7.4% this year).
As usual the finer details will be forthcoming, but here are the main takeaways:
- The planned National Insurance increase will be staying but the thresholds will be increasing by £3,000 to £12,570 from this July. This will help those who earn under £40,000 pa
- Employment Allowance will increase by £1,000 to £5,000.
- Additionally, there will be a cut to Income Tax by 2024 of the basic rate of income tax from 20% to 19% (for England only).
What else is happening now?
- Motorists – fuel duty will be cut by 5p per litre – this will be in place until March next year.
- VAT cut – 0% VAT for the next 5 years on energy saving installations such as solar panels and heat pumps.
- In order to tackle rising costs, there will be targeted support to households in the form of a fund of £1bn for local authorities to help those in need. This will be available from April.
To help SMEs right now, the Chancellor has reminded us of the following existing schemes:
- For the Retail, Hospitality and Leisure businesses, there will be a business rate discount of 50% of up to £110,000 from next week (A typical pub will save £5000)
- Help to Grow Schemes:
- Help to Grow: Digital (50% discounts on new software up to £5000)
- Help to Grow: Management Course (Offering mini-MBAs, 90% funded by the govt)
What is happening in the future?
The Chancellor announced that in the Autumn he plans to reform R&D tax credits and is considering making these more generous. Additionally, Sunak mentioned a cut to tax rates on business investment, and that he might look at making Capital Investments in plant and machinery more generous. We will have to wait and see what happens here.
The measures taken have already been criticised for not going far enough to help those who are most in need, and for small business owners in particular, an increase in the employment allowance won’t feel like much respite. Finally, a lot of the “for later” measures are very much wait and see. Well have to see what actually gets implemented and when.
We will keep getting more information from the treasury, and we will keep you updated as we do. We have not yet been given any more information about how these measures will be implemented in Scotland and Wales.
For any more questions on how these changes will impact you, please get in touch with your local AIMS Accountant, we would be happy to help.