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Duncan & Toplis expert writes about how the latest budget helps businesses at grassroots level

Following the Chancellor’s Spring Budget earlier this month many local businesses might be asking if it will provide the “grass-roots growth” promised, writes Simon Shaw, of Duncan & Toplis.

There was a welcomed focus on helping those in the hospitality, retail and leisure and haulage and logistics sectors who have continued to struggle for many reasons, including the squeeze on household budgets and increased business costs.

The first measure was to extend the freeze on alcohol duty until 2025.

Simon Shaw, of Duncan & Toplis
Simon Shaw, of Duncan & Toplis

Although many in the hospitality sector have seen large increases in energy costs at the same time as a downturn in customer spend, it can only be hoped that by not increasing the price of beer, wine and spirts through duty, pubs and others will continue to be viable.

There is also a 75% business rates relief for hospitality, which will help keep costs down.

There will be no increase in fuel duty for another 12 months, which will help private motorists, and also be a significant relief to those in the haulage sector who are under ever increasing pressure with record number of hauliers facing insolvency.

For smaller businesses the point at which they must register for VAT has been increased from the previous turnover limit of £85,000, to the new annual threshold of £90,000.

The previous threshold had been in place for many years, which meant many small businesses had breached this with the inflationary increases experienced by us all.

Although not a saving for businesses, the further reduction in employees national insurance contributions from 10% to 8% will save the average worker another £450 over the coming year.

The measures taken for businesses will need to be considered in the light of the increase in the National Living Wage from April.

The main rate increases from £10.42 to £11.44 per hour. There is also a change in that this main rate will apply to anyone aged 21 and over rather than only applying to those 23 and over.

This could see an increase of £1.26 per hour, or over 12% for some workers.

As many of the jobs paying the National Living Wage are in the sectors the Chancellor was aiming to help, we can only hope that businesses will be able to absorb the increase cost, which could be as much as £2,500 per employee.

One sector that will be negatively impacted by changes announced is Furnished Holiday Lets.

From April 2025, the profits on these businesses will be taxed in the same way as other property income rather than under their own specific rules.

The biggest change for individuals who operate these types of lettings is that the tax relief on interest paid is restricted to 20% instead of being given at the same rate as the income is taxed.

This measure has been in place for many years for those who let residential property but has not applied to businesses operating holiday lets.

Many in the sector see this as an attack on a growing source of holidays in the UK who are operating a business, rather than receiving a passive rental income.

This is bound to impact the AirBnB operators who may have chosen to let their property short term.

A small change for individuals disposing of residential property is the decrease in the higher rate of Capital Gains Tax from the current 28% to 24% from April 2024.The lower rate remains at 18%.

The Chancellor may be thinking that this reduction will remove a block which was stopping certain owners selling their property and returning them to the owner occupied market at a time when the pressure on housing remains high.

Overall, this was more of an uplifting budget which will go a long way to encouraging small and medium-sized UK businesses to grow the economy and provide the well paid jobs which are needed for us all to succeed.

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