Chancellor Jeremy Hunt has unveiled his last Budget before the General Election - so what did businesses across Shropshire make of it?
Among the headline announcements were:
Shropshire Chamber of Commerce says there is ‘much to welcome, but much still missing’ from the Budget statement today.
As expected, the headline figure was a 2% cut in National Insurance, along with economic growth figures which were marginally better than expected. It was also announced that inflation is due to return to its 2% target in the coming months.
Ruth Ross, chief executive of Shropshire Chamber, said: “It’s good to see the Government investing and supporting in research and development, and advanced manufacturing in green technologies.
“Shropshire’s hospitality sector will also clearly welcome the continued freeze in alcohol duty, which will boost the pub trade.
“The 2% cut in National Insurance is welcome, but isn’t going to make a great deal of difference to the majority of people, who will find they are paying back much of it through taxation in other ways.
“With the National Minimum Wage going up and the income tax thresholds once again failing to rise with the rate of inflation, there is an element of smoke and mirrors about all of this.”
She added: “We appreciate that the Chancellor does not have a bottomless pit of funds for dramatic tax cuts in the current climate, but businesses are wrestling with many challenging issues right now, and want a clear vision.
“At a time when local councils are struggling, without enough money to even cover their legal requirements in many instances, there was nothing in the statement to imply extra help and support on the way.
“The tax relief changes for holiday lets could be of concern to Shropshire given the large proportion of leisure and retail lets we have here in the county.”
Clive Pointon, Head of Wills, Trusts, and Tax at legal firm Aaron & Partners, had been urging the Chancellor to look at a reduction in National Insurance.
“The Conservatives share a similar stance on income tax with Labour and have made several recent changes to Capital Gains Tax. This leaves Inheritance Tax as the obvious issue to use to distance themselves from their political rivals. Whether a change that benefits those with capital in excess of £1 million is a vote winner is another matter.
“A positive change would be to action a further reduction of National Insurance for both employers and employees. It feels counterintuitive to tax jobs in the midst of a productivity crisis.”
Nathan Blissett, founder and principal mortgage adviser of Dwello Mortgages, based in Telford, said he had supported many landlords through difficult decisions over the past 12 months as many felt forced into selling some or all of their property portfolio due to rising costs.
"Reducing Capital Gains Tax from 28% to 24% for higher rate taxpayers selling a residential property is little help to the rental market - we are facing such a massive short fall of rental properties available and this will only increase the gap and is a way to encourage landlords to sell.
"The tax free allowance for CGT will be halved next month too so really something is being given with one hand and taken away with the other.
Mike Sambrook at SJ Roberts Homes said: “Whilst the Chancellor referenced an ongoing commitment to building more homes, not least of all for young people, and keeping a target of 1 million new homes during this parliament, he failed to make any significant pledges that will see the housing market stimulated to the extent it needs.
“Whilst we continue to see strong levels of interest in our new homes at Allscott Meads, especially amongst first time buyers, we must now turn attentions to an election later this year in the hope of seeing greater commitment to support for the housing sector.”
Michael Harte, managing director of Telford-based Bridge Cheese, which supplies cheese and dairy products to food manufacturers and the food services sector, said he welcomed moves to put more money back in people’s pockets – but said the Government had to remain fully committed to the Net Zero agenda.
Michael, whose business has grown turnover to £30million in five years, said the cut in National Insurance would help many families across the country struggling with the cost of living.
“It’s vital that we allow people to keep as much of their own money as possible to spend on the things they most need, so this was certainly a welcome step.
“There was also some good news in there for business – measures to extend the full-expensing process which lets us claim tax relief on investment are really welcome – but I wanted to hear more about the drive to Net Zero.
“It’s clear that we cannot row back from our legally-binding promises and we need to see a concerted drive from all in power to help us meet our responsibilities.”
Meanwhile Graham Corfield, chief executive of Telford-based Aviramp, which manufactures award-winning boarding ramps and bridges for the aviation industry said the rise in Airport Passenger Duty on non-economy flights was hugely disappointing.
“Business travel is an essential part of developing new markets and winning new contracts and maintaining the UK’s position as a global player. This increase will make the cost of doing business more expensive and reduces UK companies’ ability to compete with global rivals.
“A new increase in APD was already due to come into force next month taking the tax up to £202 on the longest international flights, and this new raise will simply add further to the costs facing UK businesses on the world stage.
“It will also be bad for this country’s airports and aviation industry in general, with the likely reduction in passenger numbers having a direct impact on the industry’s ability to invest in a world-class infrastructure.”
Neil Lloyd is managing partner of Shropshire law firm FBC Manby Bowdler and Chairman of the Training and Manufacturing Group.
He said the world-class makers of the Midlands would welcome funding packages for research and development announced by the Chancellor, but the sector needed more than just Government financial investment to meet current challenges.
“Although I welcome the investment pots, which include £200m for developing sustainable aviation and automotive tech, we need to have wrap-around support for companies if they are to deliver on the funding potential.
“That means a long-term industrial plan, support for skills development, planning reform to free up sites for expansion and an import and export strategy to combat the ongoing effects of Brexit.
“The knock-on effect of the Chancellor’s announcements for ‘joe public’ will mean more money in their back pocket.
Matt Spinks, Director of Johnson Design Partnership Ltd, a boutique architects practice in Bridgnorth, said: "This will hopefully restore consumer confidence, boost the high street, and encourage more leisure spend. From our perspective, we are hoping that this increase in disposable income might be put towards an extension or home refurbishment.
"If this happens, it will not just help Johnson Design Partnership, but will also boost the local tradespeople and contractors we employ on jobs – a real cascade effect.
"On a national level, we welcome the supposed new investment into the NHS and renewed Government backing for more housing schemes."
Stephen Deakin, Chief Executive, BCRS Business Loans said: "We are delighted the Recovery Loan Scheme (RLS) will continue and welcome the Chancellor’s announcement as the scheme has proven to be an essential tool to unlock small businesses growth."
Andy Mielczarek, founder and CEO of SmartSave, said: “Cutting NI will be celebrated, but we cannot escape the limited effect it will have. Someone on a salary of £30,000 will only get an extra £348 in their pocket annually thanks to the change, which will do little to reverse the impact of rampaging energy bills, food prices and living costs over the past two years."
Alistair Handyside, Chair of The Professional Association of Self Caterers UK, said: “What appears to be being viewed as an ‘easy’ source of revenue for the Exchequer is in fact anything but.
“Increasing the tax burden on holiday properties across England’s coasts and countryside will drive scores of thousands from this traditional British sector, as the economics of providing holiday accommodation will simply no longer add up.
“This won’t just be to the detriment of those who currently own and rent accommodation – providing affordable and accessible options to families who want to holiday in the UK – it will strip from local economies tens of thousands of associated jobs which rely on the sector, such as roles in cleaning, pubs, cafes and tourist destinations."
BUDGET ANALYSIS:
By James Clark, Tax Partner at WR Partners
In what is likely (but not guaranteed) to be his last Budget before the general election, the Chancellor focused on his growth plan to raise living standards for families and businesses, stating that cutting taxes will boost long term growth.
In a speech that lasted just over an hour, a plethora of announcements were made; most that we were expecting, but some that we were not. The headline tax cuts that will benefit small and medium sized enterprises were.
Business cuts
VAT - The threshold at which businesses will need to charge VAT on their supplies will increase to £90,000 from 1 April 2024, the first increase in the VAT threshold for seven years. This will be a welcome increase to small businesses.
Capital allowances - The first year capital allowances relief known as ‘full expensing’ was made permanent at the 2023 Autumn Statement. Whilst this was a welcome announcement for businesses investing in capital assets, there was a restriction for businesses who then leased those assets to customers. Today the Chancellor announced that full expensing will also apply to leased assets. Unfortunately, the relief still only applies to companies.
Cultural reliefs – Theatres, orchestras, museums & galleries lost out significantly during the pandemic which lead the Government to temporary increase the rates of tax relief for these businesses. These rates were due to end in March 2025 but it was confirmed these rates will be made permanent.
Fuel duty – The fuel duty freeze will be extended for a further 12 month.
Non-business cuts
National insurance – As we expected there was a further cut to the rate of national insurance for workers. Employee NIC will be cut to 8% from April 2024, with the self-employed rate being cut to 6%. Unfortunately, it appears that the cut will follow that made in the 2023 Autumn Statement and will not apply to the employer rate of NIC which remains at 13.8%, meaning businesses will not see any benefit.
Child benefit charge – This is a divisive and not well known charge for working parents, so it is welcome news that the rate at which the charge applies is increasing to £60,000 from April 2024. The Chancellor also took the opportunity to announce a reform to the charge from April 2026 where the charge will be based on household income.
Capital gains tax – in an announcement that we weren’t expecting, the highest rate on residential property CGT is being cut to 24% from April 2024.
Tax increases
The Chancellor was keen to demonstrate that the giveaways were funded without increasing borrowing and without reducing spending, but due to tax cuts.
Non-dom status – It was widely rumoured that the favourable so called ‘non-dom’ tax regime may be abolished and the Chancellor didn’t disappoint. UK residents will no longer have the option to not pay tax on their non-UK income and gains. Instead the non-dom regime will be replaced with a residency based system. A two year transitional period will apply.
Holiday lets – Another tax relief that was abolished (from April 2025) was the favourable tax treatment for people who let out holiday accommodation. The Chancellor announced it was being made to make it easier for local people to access property for longer term renting.
Stamp duty – Following suit was the announcement that stamp duty multiple dwellings relief will also be abolished, putting an end to the tax saving obtained when buying a house that has an annex included.
Vaping duty – From October 2026 excise duty will be applied to vaping products in an effort to discourage childing from taking it up. So as to not discriminate, there will be a one off increase to tobacco duty.
Overall, whilst there was a number of announcements made, there were not many for businesses to get excited about. This was definitely a Budget for the general election!
