On the 23rd of March, Chancellor Rishi Sunak delivered his Spring Budget and was met by criticism due to missing out on “a real opportunity to give businesses the help they desperately need.” Many questioned the extent these changes actually go to, such as Shadow Chancellor Rachel Reeves, who said that the Chancellor “does not understand the scale of the challenge.”

This Spring Budget can almost be seen as a ‘mini-Budget’ in a sense due to the fact that little support was announced for small businesses amongst inflation concerns and energy worries! The number of measures announced pales in comparison to that of red-book measures.

So, what were the key announcements from the 2022 Spring Budget?

Fuel duty cut by 5p per litre

For what is known as “the biggest cut in fuel duty ever,” according to Chancellor Sunak, this is actually a small cut in the grand scheme of things since fuel prices continue to rise regardless. A full tank of petrol or diesel will now cost £3.30 less, which is not much of a saving at all.

Small businesses that rely on fuel to get them to and from work every day won’t feel a difference; many will feel this change may as well not take place as the impact is so minuscule.

This fuel duty cut will take effect from now up until March 2023.

National Insurance threshold increased by £3,000

The current National Insurance threshold, set at £9,568, will increase by £3,000 to £12,570. Essentially, this means 30 million UK employees will be saving an average of £330 a year in taxes. Someone who earns £25,000 will pay £1,656 in National Insurance contributions from July, down from £1,852, while someone who earns £50,000 will pay £4,968, up from £4,852.

It’s a welcome change, but National Insurance rates will still increase by 1.25% for everybody from April, which is equivalent to a 10% hike for many workers.

This change will take effect from July.

VAT scrapped on green home measures

Chancellor Sunak said VAT on energy efficiency measures - such as solar panels or heat pumps - will be scrapped for the next five years. This is due to Brexit allowing the Government to freely reduce VAT to zero, saving families £1,000 on installation and up to £300 a year on energy bills.

£500m for local authority hardship funds

A cash boost to the Government's existing Household Support Fund will take it to £1 billion. Local authorities will be tasked with distributing the funds, which will take place next month. This is said to help ‘the most vulnerable’ by providing essentials like food, clothing, and utilities.

Another welcome change.

Employment allowance increased to £5,000

Employers will see a positive rise of £1,000 in Employment Allowance from £4,000 to £5,000. Taking effect next month, this increase will save small businesses £1,000 on top of the £4,000 - something that can soften the blow of the upcoming National Insurance contribution increases.

Employment Allowance allows eligible employers to reduce their annual National Insurance liability, meaning employers pay less Class 1 National Insurance each time a payroll is run until the £4,000 has been used up or the tax year ends. Although this is welcome for all small businesses, the increase is somewhat marginal.

Income tax rate to be cut to 19p by 2024

To end his speech, Chancellor Sunak revealed that there would be a 1% income tax cut, taking the rate from 20p to 19p (or 20% to 19%) - a measure that will come into place in 2024. Although the theory of this is that the economy will be under control by then, there is no immediate benefit to small businesses, employers or employees who need help a lot sooner. Other Conservative MPs have actually piled on pressure for the Chancellor to rethink his tax rises, including the likes of minister Jacob Rees-Mogg who have called for it to be halted.

How can businesses mitigate any risks that may be imposed on them?

Switch to electric

One of the most simple ways to cut down on fuel costs is to switch from petrol/diesel to a greener alternative in the form of electric. Electric cars are a lot cheaper to run than that of petrol/diesel cars. Currently, the latest fuel prices for petrol and diesel are astronomically high, so it may be worth thinking about how much your business is spending here.

There has even been a 37% surge in interest for electric cars in the UK due to this continued rise. Employees and employers should be doing so as well.

Be more conservative in spending

Having to live with the consequences of rising tax and inflation is something that we just now have to deal with until the economy starts to pick up again. A way of achieving this is by being more conservative in our spending habits as businesses for the time being.

Being financially conservative leads to building wealth, after all. If you are more conservative, then you will be able to manage all of the rising prices and strategise a lot better as a result. Spend where you desperately need to and save cash for when it’s required in an emergency.

Make full use of Employment Allowance

Employment Allowance brings an extra £1,000 to small businesses which can be fully utilised. Aim to invest the cash into another part of the business while you still have the chance to do so; that'll ensure you can grow your business in some way during a difficult financial period.

Detail a thorough business plan

Navigating the next few months going forward will be crucial for the survival of your business. The next Autumn Budget should lead to better measures considering this was a mini-Budget; Chancellor Sunak even promised to consult businesses prior to the reveal around October time. So your business should look to draw up a thorough business plan to see through the following few months if it hasn’t already done so prior to 2022. This can help since going in blind without any clue as to how you are to deal with this situation is a very dangerous game to be playing.

Appoint a risk management team

A useful way to manage business risks is to appoint a risk management team.

Having a fully competent team of experts to help de-risk your company from going under in the next few months is very sensible! Rather than outsourcing the work to another firm, it may be easier to control the situation and witness first-hand where you are going to end up. They can map out each and every single risk associated with your business and come up with a plan on how to deal with it if and when it actually happens. This should help you stay prepared for any unexpected situations.

Other than that, continue as normal

Finally, it’s worth noting that the Spring Budget 2022 won’t have a huge positive impact on your business, but the other factors that are soon to be implemented in April could do so instead. However, this is something you should have already planned for.

The information presented in this article is provided as general guidance, it should only be used as the basis for further research or requesting professional advice.