UK tax benefits for business in 2022: what's new

To boost business and the economy, the U.K. has developed a series of tax incentives that make the country attractive even for companies that plan to operate offshore. Data on the tax advantages for businesses in the UK in 2022 can be found in the country's published budget.

Income Tax

The income tax rate in 2022 will remain the same at 20 and 40%, but its ranges will be changed and tax benefits will be increased. Thus, the benefits are available for the following:

• personal tax credit;
• the employee tax credit;
• the earned income tax credit;
• the tax credit for a surviving or widowed civil partner (no dependent child).

A remote employee will receive an income tax credit of 30% of the amount he or she paid for electricity, heating and internet on the days he or she worked from home.

VAT for hotel businesses

If you are planning to open a company in the UK in 2022, it will be interesting to know that the reduced VAT rate of 9% will continue for hotel businesses until the end of August 2022.

Income Tax

The rate for businesses whose turnover exceeds €750 million a year is 15%.

Social security

The maximum rate of all weekly social security payments will be increased by €5, with a proportional increase for qualified professionals.

Benefits for research and development

Benefits for research and development will be extended, and the temporary level of annual investment aid of €1 million will be increased until the end of March 2023.

Alcohol

The U.K. confirmed a duty freeze on beer, wine, and cider, and cut duties on draft beer and cider by 5%. Under the new changes, drinks will be taxed based on their ethanol content.

Benefits for shipping companies

For shipping companies, the U.K. will simplify the tonnage tax regime by reducing the lock-in period from 8 to 10 years. Under this regime, shipowners are exempt from paying certain types of taxes. The HM Revenue & Customs will have more discretion to allow shipping companies into the regime if there is a good reason.

Other business benefits

• Tax reduction on the purchase and sale of business real estate;
• Five-year incentives for retail and hotel businesses. For example, £1.7 billion in aid has been budgeted;
• In 2022 it is planned to freeze the multiplier of tax rates for companies;
• The budget includes costs for the expansion of companies that operate under the program of New Product Development (R&D);
• The investment allowance is extended until the end of March 2023;
• From August 2022, the road tax on transport is planned to be abolished for 12 months;
• The UK intends to continue freezing the excise tax on transport;
• It is planned to extend benefits in the cultural sphere - for museums, theaters, orchestras, cinema and some TV channels.

Corporate tax

Starting in 2023, corporation tax is increasing by 25%, but to make sure businesses don't feel the sharp increase, the government has reduced the bank surcharge rate to 3% from 8% and increased the annual allowance in the surcharge to £100 million.

How to find out about tax relief for your business

If you want to find out more about the UK tax relief in 2022 for your business in the UK, contact IT-OFFSHORE specialists.