On March 23rd, Chancellor Rishi Sunak delivered his Spring Statement to the Parliament.
One of the topics addressed by the Government is the need to support UK businesses in the uncertain months ahead, boosting growth and productivity and incentivising firms to train more, invest more and innovate more through cuts to taxes.
For this purpose, one of the measures suggested in order to reduce and reform taxes is the increase of Employment Allowance to £5,000, starting from 6th April 2022.
The Employment Allowance was first introduced in 2014 and it provided a relief of up to £2,000 per eligible employer. From April 2016, the value of the relief was increased to £3,000 and in April 2020 it was increased further to £4,000 and targeted towards employers whose NICs liabilities in the previous tax year were under £100,000.
With the new reform, eligible businesses, charities and community amateur sports clubs will now be able to claim a further £1,000 reduction on their secondary Class 1 NICs and from 2023-24 tax year onwards also their Health and Social Care Levy liabilities.
The cut will benefit almost half a million of small and medium enterprises and will result in 50,000 businesses not paying NICs and the Health and Social Care Levy, adding up to the existing 620,000 businesses not due to pay NICs and the Health and Social Care Levy under the current Employment Allowance.
Maja Tamiazzo
Photo by Kelly Sikkema on Unsplash
