Mixed reaction to Chancellor’s measures for SMEs
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A revamp of the Business Rates system has provided help for small firms.
The Chancellor was loathe to tamper too much with a tax that brings in £25bn a year, but was mindful of the clamour for an overhaul to the regime.
He confirmed there will be no radical shake-up and Business Rates will remain, but pledged they will be fairer, with a revaluation every three years from 2023.
A new relief will encourage businesses to adopt ecological improvements, such as solar panels, aimed at renewable energy technology, and these will be exempt from charges.
Also, investments on improvements such as plant, will be exempt for 12 months, Mr Sunak said.
And he also cancelled the multiplier, which will save businesses £4.6bn over the next five years, as well as extending reliefs for small businesses to 2023, saving them £30m.
Up to 90% of the retail, hospitality and leisure sector is to get a 50% business rates discount, which is a tax cut of £1.7bn, representing a total business rates cut of £7bn.
For small brewers and cider makers, the Chanellor announced tax relief on drinks of less than 8.5% in strength. Mr Sunak said: “This is only possible because we have left the European Union.”
And, in a fillip for small firms, he announced the planned rise in fuel duty will be cancelled, which represents a saving of £8bn over five years.
The Chancellor also confirmed that the National Living Wage will rise by 59p per hour next year to £9.50 per hour.
And while corporation tax rose to 25% in the March Budget, the Chancellor revealed a corporate tax level of 28% for larger banks in 2023.
Responding to the Budget, Federation of Small Businesses (FSB) national chair, Mike Cherry said: “This Budget has delivered some measures that should help to arrest the current decline in small business confidence.
“But, against a backdrop of spiralling costs, supply chain disruption and labour shortages, is there enough here to deliver the Government’s vision for a low-tax, high-productivity economy? Unfortunately not. Where inflation and forthcoming tax hikes are concerned, the clouds are gathering.
“It’s good to see the Chancellor embrace our recommendation for business rates reform: Changing the system so it stops hitting small firms that invest to make their premises more sustainable with higher bills.
“That said, much more will be needed to support small employers in the months ahead. Our call for an increase in the Employment Allowance to £5,000 would have made a real difference to efforts to increase wages, retain staff and create jobs as we head into the critical festive season.”
He added: “Wider rates reform is positive, especially the promise of a substantial discount on bills for the hard-hit retail, leisure and hospitality industries, alongside cancellation of an increase to the rates multiplier.
“Reform of R&D tax credits is important – expanding eligibility to cover productivity-enhancing intangibles, not least cloud computing, marks a step forward. We hope the adjustments announced today lead to more small firms benefiting from reliefs that many have, to date, found a challenge to access.
“If the OBR’s concerning inflation forecasts come to pass at the same moment when national insurance contributions and the living wage rise significantly, many small firms will be considering their futures – we’ve already lost close to half a million over the last year.
“National insurance contributions serve as a jobs tax, one which threatens to seriously hamper our economic recovery over the coming months if the planned increase to it is left unaddressed.”