Business rates discount and increased Employment Allowance announced in Spring Statement

Chancellor Rishi Sunak has set out plans to cut National Insurance for retail and to temporarily reduce business rates in this afternoon’s Spring Statement (23 March).

The Employment Allowance, which cuts National Insurance (NI) for small businesses, will increase from £4000 to £5000 in April. 

The Federation of Small Businesses (FSB) said the move will help 500,000 small companies.

A temporary business rates discount of 50% (up to £110k) for retail, hospitality and leisure businesses was also announced, to take effect in April. 

The discount will be worth £1.7 billion, and will remain in place for the 2022–2023 tax year.

Optical businesses who want to apply for business rates relief can do so via their local council.  

In his speech, the Chancellor also reminded businesses owners that they can claim a discount of up to 50% on buying new equipment, up to the value of £5000, via the Help to Grow: Digital scheme, which was announced in January. A total of 17 sectors, including healthcare, are eligible within scheme. 

The FSB welcomed the plans, calling them “a good starting point,” but cautioned that more measures will need to be taken in the Autumn Statement due to what it called a “challenging backdrop.”

Martin McTague, the FSB’s national chair, said: “We are very pleased to see the Chancellor adopting our top ask for this Spring Statement: uprating the Employment Allowance to help small employers with national insurance costs.

“We originally put forward the Employment Allowance as a targeted measure to help small firms, and it has now been expanded three times since its creation.”

McTague added that, alongside the 5p per litre cut to fuel duty, which was also announced today, “these measures will provide crucial breathing space for our embattled small employers.”

However, with energy price cap due to rise by 54% from April, he noted that small businesses cannot access the same support that consumers can when dealing with energy suppliers, and that “they should have access to the same assistance to reduce energy use and support the move to net zero.” 

The British Independent Retailers Association (Bira) was less positive. Bira’s CEO, Andrew Goodacre, said: “The Spring Statement is underwhelming for indie retailers, with limited help on rising costs to business.

“While we support cuts in fuel duty and an increase in NI allowance, this is nowhere near enough to offset 300% increases in energy, 100% increase in rates and double digit increases in the cost of employment.”

He added: “Increases in product costs are easier to pass on to consumer, but these rising overhead costs are not, which ultimately means a very difficult year for small retailers."

The Chancellor said he hopes the measures will help people and businesses deal with rising costs, while protecting growth.