Sunak brings forward two new rates reliefs; National Insurance contributions cut by £1000

Chancellor Rishi Sunak on Wednesday set out a series of business support measures in his Spring Statement.

This includes a £1,000 increase to Employment Allowance to benefit around half a million SMEs. The relief, which allows smaller businesses to reduce their employers National Insurance contributions bills each year, has been increased from £4,000 to £5,000.

The cut is worth up to £1,000 for SMEs and starts in two weeks’ time, on 6 April. As a result, 50,000 of these businesses will be taken out of paying NICs and the Health and Social Care Levy, taking the total number of firms not paying NICs and the Levy to 670,000, the Treasury said in a statement.

The Chancellor also announced two new business rates reliefs will be brought forward by a year to come into effect in April this year. There will be no business rates due on a range of green technology used to decarbonise buildings, including solar panels and batteries, whilst eligible heat networks will also receive 100% relief. Together these are expected to save businesses more than £200 million over the next five years.

Sunak also reduced the VAT on energy saving materials such as solar panels, heating pumps and roof insulation from 5 per cent to zero for five years.

The Chancellor said he will examine how the tax system - including the operation of the Apprenticeship Levy – can be used to encourage employers to invest in adult training.

The support for SMEs comes on top of 50% business rates relief for eligible retail, hospitality, and leisure properties, also coming in this April and worth £1.7 billion for small businesses. The Help to Grow Management and Digital schemes, worth thousands of pounds per business, and the £1 million Annual Investment Allowance are also available to continue supporting UK businesses.

Responding to the Spring Statement, Helen Dickinson, chief executive of the British Retail Consortium, welcomed the review into Apprenticeship Levy.

“We are heartened to hear that the Chancellor has heard our concerns and is set to examine whether the Levy could be improved, to allow businesses to invest in the right training,” she said. “We urge him to introduce measures which allow high-quality short courses in functional skills, allow Levy funds to cover associated training costs, and allow a wider range of courses to be supported.”

She however added that the business rates burden needs to be addressed to increase investment by retail businesses.

“Currently, retail businesses pay 25% of all business rates, despite accounting for 5% of the economy. The announcement of a 50% relief is a welcome help to small businesses but will have little impact on the industry’s £8 billion business rates bill. Better news was given through the announcement that the ‘green investment relief’, that supports environmental property improvements, will be brought forward. This will support the investment the industry is making to become net zero by 2040, ten years ahead of the government target,” she commented.