Spring Statement 2022: What it means for retailers

Chancellor Rishi Sunak revealed the UK’s Spring Statement on Wednesday. Here are the key takeaways for retailers.

In terms of business taxes, the Employment Allowance will increase from 4,000 pounds to 5,000 pounds from next month - a move that will benefit small businesses.

From July, there will also be an increase in the annual National Insurance Primary Threshold and Lower Profits Limit from 9,880 pounds to 12,570 pounds.

The government also announced it would look into whether it could do more to encourage employers to offer 'high-quality employee training'. This would include an examination of whether the Apprenticeship Levy could be improved, something the British Retail Consortium (BRC) has been calling for.

Sunak also announced an initial cut to National Insurance Contributions that will save households around 300 pounds, with a further cut to income tax to be introduced in 2024.

BRC chief executive Helen Dickinson said: “This reduction will come as a welcome relief for consumers at a time when households across the country are squeezed by the cost of living crisis.

“Nonetheless, with the energy price caps rising in April, and inflation now running at a 30-year high, households are likely to see a fall in their discretionary income over the course of 2022.”

The chancellor also announced reforms to research and development tax credits to support business investment and increase productivity.

‘Unsustainable business rates burden’

But Dickinson said that if the government really wants to increase investment by retail businesses then it should focus on bringing down the “unsustainable business rates burden”.

Retailers are currently paying 25 percent of all business rates, despite accounting for 5 percent of the economy.

Dickinson said: “The announcement of a 50 percent relief is a welcome help to small businesses but will have little impact on the industry’s 8 billion pounds business rates bill.”

Jace Tyrrell, the CEO of New West End Company, which represents 600 businesses on Oxford Street, Regent Street, Bond Street and Mayfair, said that while government support has been “vital” over the past two years, rising operating costs and inflation could “hamper progress and threaten business recovery”.

He said: “We will continue to campaign the Government to ensure that the potential policy changes to cut tax rates include critical investment for city centre businesses, such as public realm developments, ahead of the Autumn budget.”

“In the meantime, to support the recovery and growth of city centre businesses, we are continuing to urge the Government to reconsider the removal of tax-free shopping, relax Sunday Trading laws, and make it easier for tourists to visit our shores by streamlining the visa process.

“The return of high-spending international visitors to the high street, who have been absent for far too long, is also one of the most important changes that can be made to tackle rising costs. Only with the removal of these unnecessary hurdles can viable retail and hospitality businesses across the country thrive once again.”