With businesses across the UK facing spiking inflation, many hoped the Chancellor would deliver measures to reduce bills, but Romford-based accountancy firm Clemence Hoar Cummings say while individuals were given a helping hand, businesses received less support.
Against a backdrop of growing uncertainty, a spiralling cost-of-living crisis, weaker economic forecasts and rising inflation, Rishi Sunak faced a difficult task.
Having outlined a slowdown in growth following the OBR’s latest forecasts, many assumed that little could be done, but the Chancellor surprised Parliament by announcing a new tax plan.
Clemence Hoar Cummings said that his announcement of a 5p cut to fuel duty for one year and a £3,000 increase to the National Insurance Primary Threshold and Lower Profits Limit was aimed at keeping more money in the pockets of average workers.
David Bransbury, Director at Clemence Hoar Cummings, said: “The increase to the National Insurance threshold, which will be introduced in July, will bring the rate in line with Income Tax and should help to alleviate the pressures created the Health and Social Care Levy, which sees National Insurance Contributions (NICs) increase by 1.25 percentage points from April.
“Unfortunately for employers, this rise in the threshold won’t benefit them as it doesn’t apply to the secondary threshold by which employer’s NICs are set.
“However, the Chancellor did increase the Employment Allowance, which reduces eligible employers’ annual National Insurance liability, from £4,000 to £5,000.
“This is a small giveaway considering that employers already face a higher National Insurance bill from next month and increases in other employment costs, such as the National Minimum and Living Wage.”
Beyond the changes to National Insurance and the cut in fuel duty, individuals will also welcome proposals to cut the basic rate of income tax from 20 per cent to 19 per cent from April 2024.
“There was a lot of positives to come out of the speech for businesses,” added David. “The Chancellor intends to reform other tax reliefs in the Autumn Budget later this year with a focus on ‘people, capital and ideas’, importantly improving access and funding via the R&D tax credit scheme through further reforms that could offer a £5 billion boost by 2024.”
Clemence Hoar Cummings said that most workers and businesses would welcome the tax cuts, but difficult decisions still lay ahead given rising costs.