Businesses face squeeze amid tax changes and reduction in energy support
The cap on the price per megawatt hour that non-domestic energy users consume will be lifted from April 1.
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Your support makes all the difference.Hundreds of thousands of small and medium-sized businesses will face a multi-pronged hit from the start of April, as energy bill support is slashed and their tax bills rise.
Though household energy support has been kept in place at the current level for another three months, businesses have not been so lucky.
The cap on the price per megawatt hour that non-domestic energy users consume will be lifted from Saturday, April 1.
It will not be the end of all Government support for non-domestic energy bills, but the scheme that replaces the current set-up will be significantly less generous.
Inflation is pushing up operating costs and dampening consumer confidence, with the looming recession likely to ensure that conditions remain challenging for some time to come
Business advisory firm FRP released a survey on Thursday in which 22% of the retailers it asked said that they fear they might go insolvent this year if the Government goes ahead with the cuts to energy support measures.
“These are incredibly turbulent times for retailers. Inflation is pushing up operating costs and dampening consumer confidence, with the looming recession likely to ensure that conditions remain challenging for some time to come,” said Phil Reynolds, restructuring advisory partner and retail specialist at FRP.
Last week the British Beer and Pub Association said that the average energy bill for a pub would rise by £18,400 per year from the start of April. It warned that thousands might close their doors this year as a result.
Companies will also face changes to the way their tax bills work from the start of April.
From April 1, corporation tax will rocket from 19% to 25% on non-ring fenced profits above £250,000.
It will be less of a problem for small businesses, but those with any sizable profits are likely to face a significantly larger tax burden as a result.
The Government says that the corporation tax will remain competitive on a global basis – many other countries charge companies more, and will help it raise cash to pay for vital services. By 2026 the taxman will be collecting an extra £17 billion a year as a result.
From the start of April, companies will also see a drop in the amount of tax credits they get for research and development in the UK.
The relief that small businesses can get for research and development will fall from 14.5% to 10%, making it harder for companies to secure funding to innovate.