Chancellor to boost private sector investment and innovation
The chancellor has announced a series of measures to “boost investment, innovation and growth” to address the current gaps in the labour market.
Delivering the Spring Statement Rishi Sunak has promised to create an “innovative economy” by driving business investment in research and development.
To lift growth and productivity among UK businesses, Mr Sunak set out plans to boost private sector investment and innovation and bring in a new culture of enterprise.
He increased the Employment Allowance – a relief which allows smaller businesses to reduce their employers National Insurance contributions bills each year – from £4,000 to £5,000.
The cut is worth up to £1,000 for half a million smaller businesses and starts in two weeks’ time, on 6 April.
As a result, Sunak said 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 Chancellor also announced two new business rates reliefs will be brought forward by a year to come into effect in April 2022.
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 will save businesses more than £200m over the next five years.
Ahead of the end of the super-deduction – which offers tax savings on business investment – the government will work with businesses and other stakeholders to “consider cuts and reforms to best support future investment.”
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 Chancellor committed to improving R&D reliefs too.
UK business R&D investment is less than half of the OECD’s average as a percentage of GDP, so R&D tax reliefs will be reformed to “deliver better value for money for the taxpayer while being more generous where they can make the most difference.”
The scope of reliefs will also be expanded to cover data, cloud computing and pure maths and more on this will be set out in the Autumn Budget.
There will also be a 50% business rates relief for eligible retail, hospitality, and leisure properties, also coming in this April and worth £1.7bn for small businesses.
The Help to Grow Management and Digital schemes and the £1m Annual Investment Allowance are also available to continue supporting UK businesses.
