• Tax cut worth up to £1,000 for eligible businesses announced by the Chancellor at the Spring Statement takes effect today.
• Increase in Employment Allowance from £4,000 to £5,000 benefits around 495,000 businesses – 30% of all UK firms.
• Takes the total number of firms not paying the Health and Social Care Levy to 670,000.

Nearly half a million UK businesses will benefit from a tax cut worth up to £1,000 from today (6 April 2022).

The Employment Allowance has risen from £4,000 to £5,000 – meaning smaller firms will be able to claim up to £5,000 off their employer National Insurance Contributions (NICs) bills.

Announced by the Chancellor at last month’s Spring Statement to reduce employment costs, the change takes an extra 50,000 firms out of paying NICs and the Health and Social Care Levy. This increases the total number of businesses not paying NICs and the Levy to 670,000.

Chancellor Rishi Sunak said:

This tax cut for half a million businesses will help them thrive and grow to help drive our economic recovery.

It comes on top of a suite of wider tax cuts available to firms, including 50% business rates relief, a record fuel duty cut and the super-deduction, the largest two-year business tax cut in our history.

This is the third time the government has increased the Employment Allowance since its introduction in 2014, demonstrating an enduring commitment to supporting smaller businesses. Firms will be able to employ four full-time workers on the National Living Wage without paying employer NICs at all.

94% of businesses benefitting from the £1,000 increase are small and micro businesses, and the sectors that will see the highest numbers of employers benefitting are the wholesale and retail sector (87,000); the professional, scientific and technical activities industry (63,000); and the construction sector (52,000).

Today’s Employment Allowance change is one of a number of measures on offer to spur business growth, including that:

• Last week eligible high street businesses saw the start of a new 50% business rates relief worth almost £1.7 billion, subject to a £110,000 cash cap per business.
• Businesses across the board are also benefitting from a freeze to the business rates multiplier, putting the brakes on bill increases and worth £4.6 billion over the next five years.
• Businesses are already benefitting from our temporary twelve-month-long 5p cut to fuel duty.
• Companies have one year left to make investments that benefit from the super-deduction, the largest two-year business tax cut in modern British history.
• Our landmark Help to Grow programmes are supporting SMEs to adopt productivity enhancing software and to get mini-MBAs.
• We will ensure that our tax regime for innovation is globally competitive and properly incentivises higher business investment in R&D, with further plans to be set out in the Autumn.

Michelle Ovens CBE, founder, Small Business Britain, said:

The Chancellor’s move to increase the employment allowance is welcome, and will certainty play a role in helping those businesses with employees deal with the huge cost-of-living challenges they are currently facing. In particular, it is good to see the immediacy of this rise in employment allowance, which will go towards helping businesses asap.

Martin McTague, National Chair of the Federation of Small Businesses, said:

The increase in the Employment Allowance helps small firms do what they do best, creating and sustaining jobs.

This was FSB’s ‘hero ask’ at the Spring Statement, and we have hugely valued the time taken by Treasury officials to work with us on the positive impact this will have not just on work opportunities, but also training and investment. The Chancellor has now raised the Allowance twice since his appointment, stepping up for small businesses.

Lee Harris-Hamer, from White Horse cleaning services based in Thirsk, North Yorkshire, said:

As a growing company, we appreciate the opportunity to reduce our annual NI liability because this helps us to invest the savings in other areas like staff training and further growth. Staff are our key asset and we want to be able to continue recruiting and offering more employment opportunities locally. Government has supported us with the change and we are proud to be members of FSB who championed the increase.

Jo Bevilacqua, owner of Serenity Loves hair and beauty salon, Peterborough, said:

This rise in the employment allowance offers welcome breathing space for my small business and others like us across the country. In an age where we are all facing increasing costs from all angles and every penny counts, this will help ease some pressure, allowing us to invest more in staff – whether it is increasing salaries or offering training.

Further information

• From today (6 April) businesses and charities who had employer NICs bills of £100,000 or less in the previous tax year will be able to claim up to £5,000 off their employer NICs bills. Up until today the Employment Allowance was £4,000.
• NICs policy is reserved, so this increase to the Employment Allowance will take effect across the UK.
• See full details of Employment Allowance eligibility criteria
• Smaller businesses will be able to benefit from the increased Employment Allowance from 6 April 2022. This will either be through payroll software where this has been updated or through a payroll adjustment.

Businesses hiring military veterans can now save their firms thousands of pounds in employee National Insurance contributions, thanks to a scheme launched by the government’s Office of Veterans’ Affairs.

From today (6 April 2022), employers will not have to pay National Insurance contributions for veterans in their first year of civilian employment after leaving the armed forces. Businesses will also be able to claim this relief retrospectively for any qualifying employees who joined their company in the last 12 months.

The tax incentive provides a double boost to businesses – providing them with potential savings of up to £6,200 per employee, while also allowing them to benefit from the fantastic skills and experience that veterans bring.

Businesses could save £2,567 per employee on the average salary in the UK. A business hiring 10 qualifying veterans could save over £25,000.

Minister for Defence People and Veterans Leo Docherty said:

Our veterans have made important contributions to keeping our country safe. The skills they gain during service are invaluable, and businesses can greatly benefit from their dedication.

I encourage all businesses to consider hiring veterans and supporting their journey to civilian life after service.

Lucy Frazer, Financial Secretary to the Treasury, said:

If it wasn’t for our heroic servicemen and women protecting our country, we would not have a United Kingdom to live in.

That is why as a society we must do all we can to help them when they come home – employers across the UK can benefit from our veterans’ vast wealth of knowledge, skills and experience to help their organisation grow and thrive.

The policy, which delivers on the government’s manifesto commitment, was launched in April 2021. The move is part of wider incentives to support veteran employability, including the roll out of the ‘Great Place to Work for Veterans’ scheme across government.

This National Insurance contributions holiday provides an incentive for employers to hire veterans. Businesses will benefit from the numerous transferable skills veterans gain in service, including collaboration and dedication.

The relief is available to all employers of veterans, regardless of when the veteran left the regular armed forces, providing that they have not been employed in a civilian capacity since leaving service. The relief will be available to all qualifying veterans each time they leave HM Armed Forces.

Employers will be able to claim National Insurance contributions relief on the earnings of qualifying veterans. A person qualifies as a veteran if they have served at least one day in the regular armed forces.

Detailed guidance on how employers can claim back national insurance is available here.

• £400 million government-backed loan given to Johnson Matthey, which is developing global solutions to the climate crisis
• Cash boost will help deliver Government’s Ten Point Plan for a green industrial revolution
• Biggest single investment for a UK company researching hydrogen-based energy and re-usable technology of its kind will help tackle climate change and reach net-zero

The UK will be a step closer to reaching net-zero by 2050 as the government has underwritten a £400 million loan to boost research and development in sustainable technologies today (Wednesday, April 6).

The loan will be given to Johnson Matthey (JM), which is a world-leading multinational company based in London, specialising in sustainable technologies ranging from metal recycling to green hydrogen. The financing is being provided by HSBC, Sumitomo Mitsui Banking Corporation and Bank of America, with the government backing it via UK Export Finance.

JM will be investing in the latest research and development into sustainable technologies across the globe. This will support high-skilled jobs at home, with the company employing thousands of people in green jobs across the UK in Hertfordshire, Swindon, Lancashire and London.

With further investment in hydrogen technologies, we can heat our houses, have fleets of hydrogen HGVs across the country and provide the fuel needed for heavy to abate sectors, such as steel or glass making.

International Trade Secretary, Anne-Marie Trevelyan, said:

Investments in Hydrogen technologies will blast domestic energy production higher than ever – securing the future supply of cleaner energy at home and helping us to export abroad. This will make for a healthier, wealthier future for the UK while protecting the planet.

JM is a global leader in producing sustainable chemicals and technologies such as hydrogen that could power homes, transport and industries worldwide. The company has strong green credentials and 95% of its sales and R&D spend will contribute to sustainable projects by 2030.

In its agreement with HSBC, Sumitomo Mitsui Banking Corporation and Bank of America, JM has committed to a reduction in its greenhouse gas (GHG) emissions and to decarbonise its energy procurement, with progress against its GHG reduction goals to be independently monitored by a third party.

Stephen Oxley, Chief Financial Officer at Johnson Matthey, said:

The announcement today demonstrates the strength of JM’s commitment to sustainability goals and targets announced last year. The loans will help support the significant investment we are making to help create a cleaner, healthier world.