Mini-budget: everything small businesses need to know about the Growth Plan 2022

It’s been a big week for government announcements with Kwasi Kwarteng unveiling plans to help both businesses and the UK public weather the current economic storm. In this article, we’ll take a closer look at some of the key initiatives covered by the Chancellor’s Growth Plan 2022 and what they mean for your business.

Short on time? Here’s the TLDR:

• Your National Insurance Contributions will be lower
• Your energy bills will be frozen for six months
• You’ll pay the same Corporation Tax next year
• You could be eligible for the Seed Enterprise Investment Scheme
• The Growth Plan will make IR35 simpler for you
• Your Annual Investment Allowance will stay high

Read on for all the details.

Your National Insurance Contributions will be lower

You’ll remember that National Insurance Contributions (NICs) were increased by 1.25% in April this year. Today Kwasi Kwarteng confirmed the news that had already leaked on Wednesday that he’ll reverse this increase from 6 November.

According to the Chancellor, paying less in NICs will help your business save as much as £10,000 next year. You can use those extra funds whichever way you choose, whether that’s investing in growth or simply cushioning the impact of rising costs.

Your energy bills will be frozen for 6 months

The newly announced Energy Bill Relief Scheme is designed to help your business through the winter. Under the scheme, the amount you’ll pay for gas and electricity will be capped at these government supported prices for six months from 1 October:

• £211 per megawatt hour (MWh) for electricity
• £75 per MWh for gas

You don’t need to do anything to enter into the scheme – your energy supplier will automatically apply the relevant discount to your bill. You’ll pay the discounted rate, and the government will make up the difference for your supplier. If your business is already paying less than the government support prices, your energy bill won’t be affected by the scheme.

The government website has a dedicated Energy Bill Relief Scheme page which explains how the discounts are applied to fixed, variable or deemed contracts and includes practical examples across a variety of industries.

You’ll pay the same Corporation Tax next year

Under the previous government, Rishi Sunak announced that Corporation Tax would increase from 19% to 25% in April 2023. The increase would be immediate for businesses making more than £250,000 profit and incremental for businesses making between £50,000 and £250,000.

The new Chancellor has announced that the increase won’t be going ahead, so you’ll keep paying 19% corporation tax next year. If you’ve already accounted for the increase in your 2023 budget and cashflow forecast, readjusting to the current rate is a good problem to have.

You could be eligible for the Seed Enterprise Investment Scheme

The government-backed Seed Enterprise Investment Scheme (SEIS) which has been around for a while has been given a facelift in the Chancellor’s Growth Plan. Kwarteng announced that the SEIS will be expanded to provide more startups and young businesses with more funding.

The scheme is designed to encourage VC investment in small and early stage businesses by offering generous tax relief and other benefits to investors. There are of course eligibility criteria based on the trading history and value of your business. There are also limits on how much funding you can raise and how much funding investors can offer over the course of a year.

These areas are where the key changes are being made for businesses:

• You’re now eligible for the SEIS if you’ve been trading for three years (this is up from two years)
• The average gross value of assets set out in the eligibility criteria is up from £200,000 to £350,000
• Previously you could only raise £150,000 through the scheme, now you can raise up to £250,000

There’s an SEIS website and guidance on the government website where you can get the full details, see if your business is eligible and find out how to apply.

The Growth Plan will make IR35 simpler for you

Since 2021, it’s been your responsibility to decide whether the working relationship you have with your any contractors is on an employed, rather than self-employed, basis. But the government has decided to roll back to earlier IR35 rules from April 2023.

In short, your contractors will once again determine their own employment status. They’ll also handle paying the correct tax and NICs, easing at least some of the pressure on your to-do list.

Your Annual Investment Allowance will stay high

This morning Kwarteng made the £1 million Annual Investment Allowance (AIA) limit permanent, assuring businesses that it wouldn’t roll back to £200,000 in March as previously planned. You’ll continue to get 100% tax relief on plant and machinery investments.

If you’re not familiar with the AIA, here’s a quick breakdown. It’s a tax relief scheme that lets you claim back 100% of the tax your business pays on plant equipment or machinery. Importantly, you can claim the tax back within the same year.

Being able to claim back up to £1 million could help you make the upgrades your business needs to move forward in 2022 and focus new energy on your long-term growth plans.

You can read (a lot) more about the Growth Plan

There’s a lot of information out there about Kwasi Kwarteng’s Growth Plan 2022 which covers more than the key initiatives we’ve mentioned here. We recommend heading over to the government’s Growth Plan hub which for a wide range of fact sheets and other resources.

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