Mixed reaction to Chancellor’s measures for SMEs

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 Chancellor 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.

Zoe Roberts

Zoe Roberts, partner at BHP commented: “A thorough reform of business rates is well overdue, but any simplification and additional reliefs will be welcomed by SMEs, although whether these will go far enough to provide a meaningful impact remains to be seen. The extension of the R&D reliefs to include cloud and data costs is definitely helpful but otherwise, SMEs may feel disappointed that there was little else announced to offset the increasing tax burden they will face as the corporation tax rate increases in 2023 and the Health & Social Security levy will add 1.25% to their wage bills from April 2022”

Ian Fozard, Rooster

Ian Fozard, owner of award winning Harrogate brewery Rooster commented on the changes to alcohol duty: “No changes until Feb 2023 and there’s no concrete proposals, just a lot of conjecture about reform. Reform will happen – which is good- but it’s 15 months off. Even the lower rate of duty for draught beer won’t happen until then.

“My overall reaction is one of relief – I.e. no immediate duty increase but, for example the reforms to Small Brewers Relief have been kicked into the long grass leaving many small brewers still in limbo.”

National chair of the Federation of Small Businesses (FSB) Mike Cherry added: “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.”

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.”