Business rates and employers’ National Insurance under Chancellor’s spotlight
The Chancellor has revealed several measures that will directly impact businesses as he aims to ‘stabilise the economy and bring down inflation.’
Alongside several announcements regarding personal tax cuts, he has announced changes to R&D reforms, NICs, and business rates.
Hunt will implement reforms aimed at making sure multinational corporations pay the right tax.
Alongside further measures to tackle tax avoidance and evasion, this will raise an additional £2.8bn by 2027-28.
Following reports of abuse and fraud in R&D tax relief for SMEs, Hunt said he is cutting the deduction rate for the SME scheme to 86% and the credit rate to 10% but increase the rate of the separate R&D expenditure credit from 13% to 20%.
He said: “Despite raising revenue, the OBR have confirmed that these measures have no detrimental impact on the level of R&D investment in the economy.
“Ahead of the next Budget, we will work with industry to understand what further support R&D intensive SMEs may require.”
Employer NICs threshold
The Chancellor will freeze the Employers NICs threshold until April 2028.
However, the Government will retain the Employment Allowance at its new, higher level of £5,000.
Around 40% of all businesses will still pay no NICs at all, he said.
Hunt will maintain the VAT registration threshold until March 2026.
Hunt said business rates revaluation will go ahead as it is “an important principle that bills should accurately reflect market values.”
He will proceed with the revaluation of business properties from April 2023 but added that he will ‘soften the blow on businesses’ with a nearly £14bn tax cut over the next five years.
“Nearly two thirds of properties will not pay a penny more next year and thousands of pubs, restaurants and small high street shops will benefit,” he said.
“This will include a new government funded Transitional Relief scheme as called for by the CBI, the British Retail Consortium, the Federation of Small Businesses, and others, benefitting around 700,000 businesses.”
Gas and oil companies will be hit by an extra windfall tax.
The Chancellor has increased the windfall tax on energy firm from 25% to 35% and expanded the levy to electricity generators which will be hit with a windfall tax of 45%.
Register today for this year’s AccountingWEB Live Expo on 30 November and 1 December and be a part of 2022’s premier accounting event.