Tax cut will help small Firms create new jobs
SMALL businesses were given a helping hand to tackle high costs in yesterday’s Spring Statement.
Rishi Sunak announced a tax cut on staff costs and to help create jobs as he insisted the Government is “delivering” for British firms.
The Chancellor said 500,000 firms will benefit from changes to the Employment Allowance.
Mr Sunak also announced tax breaks on green technology and promised more relief on research and development later in the year.
Businesses are also expected to benefit from a 5p fuel duty cut, which is worth £200 for the average van driver and £1,500 for the average haulier.
But industry leaders accused the Chancellor of failing to do enough
to help them cope with the massive pressures they are facing.
Mr Sunak’s tax plan sets out options to cut levies on business investment and innovation, and the final decisions will be announced in the Autumn Budget.
He said the choices are “significant and complex” and that the Government will work with businesses over the summer to “get the answers right”.
The Chancellor said he wants to incentivise businesses to invest in the right kinds of training, boost productivity and increase innovation.
He said: “In the Autumn Budget, we will cut the tax rates on business investment and I look forward to discussing the best way to do that with businesses.
“People, capital, ideas – three priorities for business tax cuts this autumn.” But Mr Sunak said he
wanted to help smaller businesses “right now”.
Employment Allowance, which means some businesses can reduce their employer National Insurance contributions bills, will rise from £4,000 to £5,000. Nearly a third of
businesses, some 495,000 firms, will benefit from the change, with around 50,000 taken out of paying NICs and the Health and Social Care Levy entirely.
Making green technology, including solar panels and heat
pumps, exempt from business rates from April will save businesses an extra £35million in 2022-23, according to the Treasury.
But Labour said there was nothing in the statement to help energy intensive industries, such as ceramics and steel, cope with rocketing costs.
Shadow chancellor Rachel Reeves said: “The silence from the Chancellor about our energy intensive manufacturing industries is appalling.
“At this time of national crisis, people and businesses need a government that is on their side.”
Support
Make UK, which represents manufacturers, said the sector was facing cost increases that are pushing many towards a “tipping point”.
Chief executive Stephen Phipson said: “Companies would have been looking for substantial business support measures to help alleviate these. In particular, the lack of action on energy costs for business is especially hard to fathom.
“It has been two years to the day
since lockdown began and there is very little in today’s statement to support a sector that kept working throughout the pandemic.
“The promise of jam tomorrow with consultations through the summer and action in the autumn will also be of little comfort for many who would have liked to have seen action and support immediately.”
Hospitality leaders warned the sector faces significant pressures when a temporary reduction in VAT to 12.5 per cent ends next month.
Emma McClarkin, chief executive of the British Beer and Pub Association, said: “We are very disappointed that the Chancellor decided not to extend the 12.5 per cent rate ofVAT for hospitality.
“The sector remains on a knife-edge as it emerges from the pandemic.The impact of the recent
energy crisis and invasion of Ukraine has ensured the turbulent times will continue for pubs and brewers just as we had hoped to build the road to recovery.
“The coming months could be some of the hardest yet.” CBI
director general Tony Danker said the Chancellor’s plan to incentivise business investment from next year is “very good news”.
But he warned: “We cannot wait until October to get growth going.
“The Chancellor is right that the
Government challenge.
“However, the only enduring response to inflation, energy prices and cost of living challenges is a relentless campaign for economic growth.” Shevaun Haviland,
can’t solve every director general of the British Chambers of Commerce, said: “Businesses will be pleased that the employment allowance has been increased.
“This long-running ask of the BCC will provide a small amount of financial headroom for firms facing rising costs.”
Praised
Martin McTague, chairman of the Federation of Small Businesses, praised the new plans.
He said: “We are very pleased to see the Chancellor adopting our top ask for this Spring Statement – updating the Employment Allowance to help small employers with national insurance costs.
“Together with a cut to fuel duty, these measures will provide crucial breathing space for our embattled small employers.”