Aftermarket May 2022

Above: Business owners are having to deal with rising costs as well as every-day demands pence per litre. Fuel duty had been frozen for the last 11 years. According to the AA, the 5 pence fuel duty cut works out at a saving of £2.75 on a 55-litre tank. The cut was also only the second cut in 20 years. While Business Rates Relief is staying in place, from 1 April the allowance will drop from 66% to 50%. At the same time, the most a business will be able claim will fall from £2m to £110,000. The Chancellor also said he would put up Employment Allowance for small businesses. This allows eligible businesses to reduce their annual National Insurance liability, paying less employers’ Class 1 national insurance with every payroll run until the total has disappeared or the end of the tax year arrives. Businesses can claim Employment Allowance if its employers’ Class 1 national insurance liabilities were less than £100,000 in the previous tax year. The maximum was £4,000, but the Chancellor has increased it to £5,000. The Chancellor said: “From April, the employment allowance will increase to £5,000. That’s a new tax cut worth up to £1,000 for half a million small businesses, starting in just two weeks’ time.” As previously planned, National Insurance for employers and employees increases by a combined 2.5% from April 2022. On the plus side, the Chancellor has also revealed that the threshold for employees to start paying National Insurance would increase from £3,000 to £12,570. Looking at training, and reflecting on the IMI’s concerns, the Chancellor said the government will reflect on whether or not the Apprenticeship Levy is doing enough to “incentivise businesses to invest in the right kinds of training.” Lastly, while it will not apply until next year, the Chancellor also revealed that the basic rate of income tax would be cut by 1% in 2024, dropping from 20% to 19%. There will also be an increase in Employment Allowance to £5,000. The Chancellor added: “This statement puts billions back into the pockets of people across the UK and delivers the biggest net cut to personal taxes in over a quarter of a century. Like our actions against Russia, I have been able to do this because of our strong economy and the difficult but responsible decisions I have had to make to rebuild our finances following the pandemic. 14 AFTERMARKET MAY 2022 BUSINESS www.aftermarketonline.net “Cutting taxes means people have immediate help with the rising cost of living, businesses have better conditions to invest and grow tomorrow, and people keep more of what they earn for years to come.” Challenges Once the Spring Statement had been delivered, the automotive sector offered its reactions. Sue Robinson, NFDA Chief Executive, said: “In the Spring Statement, the Chancellor has taken a number of positive steps. However, the measures announced fall short of supporting businesses as they recover from the pandemic and face current challenges such as soaring costs.” The Business Rate Holiday total being reduced, Sue said: “While it is positive that the government recognised the need to extend the Business Rates Holiday, it is extremely disappointing that the claim rate has been reduced as this will exclude most dealer groups”. On the roll-out of the already announced National Insurance increase, she observed: “As the cost of living increases for households across the UK, it is welcome news that the national insurance threshold will be raised. However, confirming the previously planned increase in National Insurance is unhelpful and will add further strain to people’s disposable income. This inevitably also has an impact on businesses: “Increasing the tax burden on businesses sends the wrong message at the wrong time.” With regards to the Apprenticeship Levy, she observed: “The automotive industry is fully committed to investing in apprenticeships and it is encouraging that the government will review the current Apprenticeship Levy in line with NFDA’s recommendations. In particular, in our submission and at previous meetings we have called on the government to extend the Apprenticeship Levy clawback period by 18 months to support the recovery of automotive apprentices’ recruitment”. On the potential impact of the Levelling Up Fund on EV infrastructure investment as its second round kicked in, Sue added: “Positively, the government has previously allocated a part the first round of Levelling Up Fund to upgrading EV charging networks in Northern Ireland. With the second round of the Fund, we encourage the government go further and adopt a similar approach with the rest of the UK”.