Expert Eye: Duncan and Toplis consider the impact of new government on businesses

Following the recent change in government, many local businesses will be asking what this means for them, writes Simon Shaw of Duncan and Toplis.

The short answer is that it is likely all businesses will be impacted by a wide range of policies; some positively, some negatively.

The new government says it is committed to supporting economic growth and wealth creation and its election manifesto spells out several key policies, many of which it is already pursuing. It has also pledged to provide economic stability with ‘clear rules’ on tax and spending policies with independent oversight from the Office for Budget Responsibility (OBR).The government may be aiming for a September Budget, meaning that change is likely to come sooner, rather than later.

Businesses crave certainty, so it is welcome news that the party has committed to capping Corporation Tax at its current level of 25%. There will be a roadmap setting out future business taxes, which should enable businesses to make longer-term plans. This lacks the detail that businesses would like to see, however, we do know that there will be changes to the current business rates system with the aim of supporting the high street and ensuring all businesses contribute fairly. Local retailers will be keeping a close eye on what this means for them in practical terms in the coming months and years.

One measure which was widely known about was the introduction of VAT on private school fees. This, along with additional and taxes for non-doms, will raise significant additional tax revenues.

There has been a pledge not to increase existing income tax rates, National Insurance or VAT. Although the new chancellor, Rachel Reeves, has said that the government will not look at altering capital taxes straight away, this could mean that changes to Capital Gains Tax, as well as inheritance tax, are on their way. The new government will need to raise more money if it’s to meet its spending promises.

For employers increases to the National Minimum Wage and National Living Wage always come at a significant cost. There is a commitment to scrapping the tiered system that sees younger adults paid less than their older colleagues. The government also says it will turn the minimum wage into “a real living wage” that takes account of the cost of living. It is likely these changes will lead to increased costs for many businesses, especially in those sectors who employee a large number of younger workers who are paid at the current national minimum wage.

There is likely to be significant changes to workers rights to give employees more rights from their first day in a job and ban what the government considers to be “exploitative” zero-hour contracts and the practice of “fire and rehire.”

There has been much talk about mandatory housebuilding targets for local councils and changes in the planning system to remove obstacles to meeting these targets.

Businesses in the construction sector will have a large part to play in achieving these ambitious plans for house building and other infrastructure projects. Although this brings opportunities for builders, there are still questions over the affordability for homeowners and the availability of skilled workers . We will have to wait and see if the Chancellor’s figure of 1.5 million new builds over the next 5 years is achievable and what benefits it brings to the construction sector and the wider local economy.

Continuing the theme of housing, there are plans to ban “no-fault” evictions and give renters more powers to challenge rent increases. Landlords, many of whom own a very small number of properties, will be considering what these changes mean for them and if they wish to continue under the new rules.

Finally retailers may benefit from the government’s aim of tackling shoplifting gangs by allowing police to investigate lower-value thefts.

Time will tell as to how many of these manifesto pledges will be met within the next five years, but many of these policies are already being pursued.