BUDGET Breaking: Small businesses and family businesses are going to find it tough

ThinCats to provide up to £300 million additional funding for businesses through British Business Bank programme

Business support organisation, the Forum of Private Business, has highlighted that the Chancellor has once again failed to address the issue of Business Rates properly, and missed the opportunity to create an immediate level playing field across small businesses, big businesses and online businesses.

Support for extended reliefs for the hospitality sector is welcomed, but other small businesses have been ignored, it said.

Whilst supporting the focus on low pay (From 1st April 2022 the National Living Wage will increase by 6.6% to £9.50 an hour. Young people and apprentices will also see pay increases as the National Minimum Wage rates will also increase next April), notwithstanding the pain that will be faced disproportionately by smaller businesses from the rise in the minimum wage and may drive some businesses to delay new job creation, the FPB said.

Ian Cass, Managing Director of the Forum of Private Business, said: “The relief provided to businesses during the pandemic by postponing Business Rates saved many businesses from closing. To save our high streets those same businesses need that relief to continue. The 50per cent allowance for hospitality sector businesses is clearly welcomed, and providing reliefs for green investment is fine, but many of the retail shops that our communities rely on still face what they see as unfair business rates, and deferring the reviews until 2023 risks kicking the can down empty high streets.”

The FPB emphasises the impact on high street businesses of online business growth during the pandemic. The imposition of business rates on shops and offices, but less so on online businesses means that there is an imbalance on fair competition which threatens the life of the country’s high streets.

“The use of online services accelerated during the pandemic, quite understandably, and it is a shame that the Chancellor has not similarly accelerated a fair Business Rates regime across all levels of business,” adds Ian Cass

Nick Latimer at tax and financial advisory company Crowe, said: “For my private clients and family business owners, it was good to see no significant further tax rises beyond the 1.25% increase in the rates of national insurance and dividend tax that were previously announced to fund social care. Nevertheless, the tax burden as a result of this and the previously announced increase in corporation tax to 25% from April 2023 will be historically high.

“The freezing of personal tax and other thresholds have a revenue raising effect given inflation in the economy, and further rises might have had the impact of further slowing our recovery from COVID-19, the best way out of our debt problems as acknowledged by the chancellor in his speech.

“For businesses, the extension of the £1 million annual investment allowance for business investment until March 2023 will also be helpful, though some care will be needed to decide whether this, or the previously announced 130% “super deduction” for corporates, is more beneficial.

“I am pleased the Chancellor did not raise the top rate of Capital Gains Tax from 20%, which have been the subject of much speculation. There is a need to look at whether capital gains tax rates incentivise the taxpayer appropriately, but maintaining a low rate for entrepreneurial activity and a lifetime of work encourages new businesses to set up and thrive.  The differential rate of capital gains tax for residential property (up to 28%) has not significantly, in my experience, stopped investors from backing the housing market to continue to perform, particularly with further announced government backed support and investment in affordable housing and earmarked brown-field land for new homes.

“The introduction of draught relief for beer and cider, reducing duty in pubs from 2023, will also be appreciated in the west country where I am from, as well as elsewhere, though perhaps not the duty increases for higher strength alcohol.

“There will be tax avoidance measures to look at in the detail, and where there are ‘simplification’ measures, these often lead to an increased tax take.  As ever, the devil will be in the detail of the budget documents.”