The last 18 months have not been an easy period for small businesses. From lockdowns causing them to close down completely, to social distancing guidelines making it difficult for them to operate as normal, it is hardly surprising that many small businesses have struggled to survive.
This has been such a problem across the board that the UK government has had to step up and offer support to those businesses who need it the most. So whether you are a small business that is struggling to stay open, or you are interested to know what support network you have in place if things don’t go so well in the new year, then this is the guide for you.
Here is what help we predict will be available for UK small businesses in 2022.
VAT rate reduction
The cost of VAT can be one of the main expenditures that small businesses face. When you are buying supplies and products needed to keep you operating, the costs can soon start to add up.
Therefore, as a way to offer extra and help support, the government has reduced the rate of VAT for certain items for eligible businesses. This mostly includes the hospitality sector and items such as hot/cold food and non-alcoholic beverages that are consumed on business premises.
While this VAT rate reduction from 20% to 5% was available for eligible businesses during 2021, we also predict it to be available at 12% until 31 March 2022. However, we recommend that you check out whether your small business is eligible for this initiative before you make any plans or investments.
The employment allowance is another government scheme that the UK government has made available to support struggling small businesses. It allows employers who are eligible to reduce how much national insurance they pay by up to £4,000.
As a business with employees, you are expected to contribute towards their National Insurance. However, under this scheme, you can reduce how much you pay every time you run your payroll until you reach the £4,000 rate (or the tax year ends – depending on which comes first). You can check if you are eligible here.
Government backed business loans
It can be surprising how much the cost of running your own business starts to add up, and while you may feel like a business loan could be exactly what you are looking for, you may be worried about finding the loan that is right for you.
Therefore, the UK government has created the Pay As You Grow loan that small business owners can access via their high street bank. This is part of their Bounce Back Loan scheme which aims to give small businesses the extra support they need.
But do not worry, these government-backed loans do not affect your credit score or affect your credit file negatively as long as you keep up with repayments and don’t miss any deadlines.
Super deduction scheme
One of Rishi Sunak’s latest initiatives as part of his 2021 budget, the Super Deduction scheme encourages small businesses to invest money where it is needed the most to help support their future. The initiative can reduce corporation tax bills by up to 130% on any business investment made in the next 2 years.
So whether your small business would benefit from new computer equipment or want to make a new investment in the air compressor industry, this is a great scheme to help improve any cash flow issues.
Time to pay arrangement
Another way that small businesses will be helped and supported in 2022 is by the government’s Time to Pay scheme. This was announced in the last budget and allows those who self assess their tax contributions to spread the cost via installments. This makes it more affordable, and HMRC has also revoked the 5% payment charge for this payment plan to make it more accessible.
While the thought of being a small owner in 2022 may be an anxiety-provoking one, there is likely to be a range of initiatives and schemes in place that can help offer you the support you need to make the new year a successful one.