Spring Budget 2022: Live updates on how it will affect your small business

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Hello and welcome to Startups.co.uk’s live coverage of the Spring Budget 2022.

We’ll be offering regular updates on this crucial day for UK small businesses, as the Chancellor Rishi Sunak outlines how he will support the country’s economy in such turbulent times and help small businesses struggling to cope with soaring inflation and a cost of living crisis.

Fuel duty is expected to be cut to help weather the impact of rocketing petrol prices, and many are calling for Chancellor Rishi Sunak to defer the planned increase in National Insurance contributions.

The budget (or Spring Statement technically) proper is expected to start at 12:30pm GMT, but we’ll start by explaining what we know so far.

What to expect from the Spring Budget 2022?

Unusually, nothing has been officially announced or semi-officially leaked ahead of this budget, with Sunak only having promised to provide “security for working families”. The strongest hint we have in terms of actual policy is a probable cut to fuel duty.

Fuel duty cut

With prices at the pumps having risen hugely in the last two years, a fuel duty cut of at least 5p a litre is widely expected. However, with research showing that a 5p cut would only reduce the cost of filling a tank by £2-£3, this potential cut has already been criticised for having little impact and benefiting richer consumers.

Live updates

Fuel duty cut confirmed

Chancellor Rishi Sunak’s first announcement is that fuel duty will indeed be cut by 5p a litre. He calls this the biggest cut in fuel duty ever and says it will be in place until March 2023. The cut will take effect from 6pm tonight (22 March).

National Insurance threshold increased by £3,000

This is a big one. While Sunak confirms the planned increase in National Insurance contributions will go ahead, he follows it up by saying that the National Insurance threshold (the amount you can earn per year without paying National Insurance) will increase from £9,600 to £12,570.

What this means is a tax cut for approximately 30m people, with Sunak saying it will save employed people £330 a year.

Writing on Twitter, IFS Director Paul Johnson said this move will mainly benefit those earning £35,000 a year or less.

This also means that the thresholds for income tax and National Insurance will be aligned, so your employees will be able to earn up to £12,570 a year without paying a penny in income tax or National Insurance contributions.

IMPORTANT – This change will take effect from July, due to the time needed to change IT systems etc.

Need help working out your business finances and navigating the tax system? Check out our guide to the best small business accounting software and range of in-depth accounting software reviews.

Business tax cuts in the Autumn

Sunak promises to consult businesses and reveal in the Autumn budget measures designed to encourage investment in skills, improve the UK’s levels of capital investment, and promises to reform tax credits to help companies to invest in innovative technologies.

Employment allowance increased to £5,000

Bowing to pressure from small businesses, Sunak says that the employment allowance will increase from £4,000 to £5,000.

This increase will take effect from April 2022.

It should save small businesses £1,000 a year and help soften the impact of the increase in National Insurance contributions.

1% income tax cut from 2024

Sunak rounds off his speech by pledging to cut income tax in 2024, the theory being that the economy will be under control by then.

So, in two years, the basic rate of income tax will be cut from 20% to 19%.