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Spring Statement: Chancellor cuts fuel duty and boosts employment allowance
The UK Chancellor has announced cuts in the fuel duty, income tax and a boost for the employment allowance to help small businesses in the Spring statement – as he announced the government will work with business over the summer to work out how to boost productivity and innovation.
Speaking in the House of Commons today, Chancellor Rishi Sunak announced new measures to help Brits with the cost of living and boost the UK’s productivity and growth.
Among the headline news for businesses was a 5p/L cut in the fuel duty that will be in effect until March 2023, and help both UK motorits and businesses running vehicles and deliveries.
The Chancellor is also increasing the employment allowance relief from £4,000 to £5,000, which he said would benefit more than half a million small businesses. Coming into effect next month, this boost will make it cheaper for small businesses to hire workers by increasing the relief towards National Insurance payments, he said.
Sunak also pledged to work with businesses over the summer to work out the best way to lift growth and productivity and “create a new culture of enterprise” that will enable businesses to “trade more, invest more and innovate more”.
Some of the areas they will look at include addressing the adult technical skills gap and considering if the current tax system incentives business to invest in the right training, as well as reforming R&D credits and ways to cut tax rates on business investment. Currently, R&D spend is les than half the OECD average, while private sector investment lags behind other major advanced economies, he said.
The plans will be announced in the Autumn Budget.
He also announced employees will see a £3,000 increase in the threshold for National Insurance, and he pledged to cut the basic rate of income tax from 20p to 19p in the pound before the end of this Parliament.
The announcement comes as the cost of living in the UK continues to rise. The Office for Budget Responsibility has slashed the expectations of UK growth, down from 6% to 3.8% this year, while annual inflation hit its highest rate in 30 years in February, at 6.2%. It is likely to grow to around 7.4% for the rest of 2022 before peaking at 8.7% in the final quarter.
Opportunity lost
However the government’s failure to extend the 12.5% rate of VAT for hospitality is likely to come as a disappointment for many in the industry, while business rates consultants Collins called the failure to reform business rates or provide clarity on transitional arrangements as “disappointing”.
Rather than announced any new measures on business reform, Sunak reiterated to the House the government’s previously announced business rate discount that are due to come into effect for retail, hospitality and leisure businesses, with a 50% discount on business rate bill up to £1,100, “a tax cut for hundreds of small business that will take effect in eight weeks time,” he said.
For the industry’s reaction, see here:
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