We were one of the millions eager to hear what Rishi Sunak’s Spring Budget would reveal for businesses and we have filtered through the information to make it easier for you to find out how you will be affected:

National Insurance 

Rishi has announced a rise in the national insurance threshold by £3,000, which means that the income threshold at which people start paying NI will rise to £12,570 starting from July.

This may sound good, but the rate of NI is rising by 1.25% from April so everyone will pay more between April and July, and then those on lower incomes will pay less whilst those on incomes over £50,000 will pay more even with this change.

Income Tax 

From April 2024, the basic rate will be cut from 20% to 19%. The rate at which you start paying income tax is currently frozen until 2026. As 2024 is a long way off, we aren’t getting too excited about this one just yet.

Employment Allowance 

From April, the employment allowance will increase to £5,000. This new tax cut, worth up to £1,000 for half a million small businesses, is a much-welcomed change.

Fuel

With the recent high increases in the price of fuel, this has been a popular topic of conversation. Therefore Rishi had to do something about it. Fuel duty will now be cut by 5p per litre which will be implemented for one year. Hopefully, this will help but it seems like a very specific measure to help a more general problem of rising prices, It’s not just fuel that is rising, it’s the cost of living as a whole. Great for drivers and those with fleets but doesn’t do much to help fight rising prices.

Business Rates

Rishi knows there is still a strain on small businesses following the pandemic and he will be discounting business rates in April for retail, hospitality, and leisure. A discount of 50% will be added onto their business rates and bills, up to £110,000. Great news for these businesses.

VAT

It was announced that VAT would be removed on materials such as solar panels, heat pumps, or insulation.  This is great news for the renewable energy market.

Our View

No one really knows what is going to happen in the next 6 months, except that prices are on the rise and inflation is increasing. It seems odd then, that in light of the increased pressure on the economy and people’s pockets, the chancellor is raising tax on NIC and Dividends (an additional 1.25%) and introducing a Corporation Tax rise.

It would have been good to see a general measure to help ease the burden of inflation and price rises, such as a VAT cut for example, but we can only hope that the chancellor has a plan. Generally, for business, the best news in this budget is the increase in the employment allowance.