Spring Budget 2017: How the Industry Reacted

The Chancellor unveiled that no business losing small business rate relief will see their bill increase next year by more than £50 a month, a £300m fund will be organised for local councils to offer discretionary relief for businesses hit hardest, and 90 per cent of pubs will get a £1,000 discount on their business rates bill.

The Chancellor’s announcement has been met by mixed emotions within the retail and food industries, with Mike Cherry, national chairman at the Federation of Small Businesses (FSB) stating, “FSB welcomes the fact that the Chancellor has listened to the small business-led campaign on business rates. The £435 million of new money is a direct and much-needed response to those facing astronomical hikes in their business rates. This immediate relief is vital in the short-term, and action on more frequent revaluations will also help. But this tax remains out-of-date, so today we call for a cross-party commission to create a simple, fair tax system for a modern economy.

“Mr Hammond announced that he would take forward FSB’s proposals to help the self-employed in the benefits system. We look forward to working with him on what this may mean for maternity benefits and paternity leave.

“However, the National Insurance rise to 10 per cent next year and 11 per cent in 2019 should be seen for what it is – a £1bn tax hike on those who set themselves up in business. This undermines the government’s own mission for the UK to be the best place to start and grow a business, and it drives up the cost of doing business. Future growth of the UK’s 4.8 million-strong self-employed population is now at risk. Increasing this tax burden, effectively funded by a reduction in corporation tax over the same period, is the wrong way to go.”

“More short term relief measures continue to add complexity to an already impenetrable system”

Helen Dickinson, chief executive of the British Retail Consortium (BRC) said, “We agree with the Chancellor that the world around us is changing quickly and we need to have a business tax system that is fit for purpose in the 21st century. Any review needs to incorporate business tax in its entirety and not be constrained by the technicality of fiscal neutrality around business rates.

“We hope that the relief measures will help some of those businesses hardest hit by the revaluation, albeit only temporarily. However, more short term relief measures continue to add complexity to an already impenetrable system. £435m is a drop in the ocean compared with the £25 billion a year that the tax raises. This is yet another sticking plaster on a chronically ill patient – an unsustainable property tax higher here than anywhere in the developed world.”

James Lowman, chief executive of the Association of Convenience Stores (ACS) welcomed the £300m discretionary rate relief scheme, but raises concerns over the costs for small businesses of introducing new tax reporting processes and new tax rules for dividends paid to owner-directors.

He said, “The £300m discretionary fund given to Local Authorities could provide welcome relief to the hardest hit by business rates increases. We are committed to working with the Department for Communities and Local Government on the formula for allocating discretionary relief funding across local authorities, and we will help members make their case for rate relief to their local authority. We are disappointed that there has been no targeted relief for petrol forecourts which are some of the hardest hit businesses as a result of the revaluation, but will support these stores in making a case to their local authorities for much needed help.”

It’s time for the Chancellor and government to fully recognise British farming’s value for money”

Meurig Raymond, president of the National Farmers Union (NFU)  said, “There were few measures in today’s budget to help create an environment that supports profitable, progressive and competitive farm businesses. The Chancellor’s announcement on capping business rates increases will be welcome news to members with small diversified farming businesses.

“However, the rise in National Insurance Contributions for the self-employed by 1 per cent next year and a further 1 per cent the year after will have a detrimental impact for farmers. The NFU is striving to make the government aware of the implications this will have on the sector.

“We are still very concerned about the government proposals on Making Tax Digital. While we welcome the announcement that it will be delayed until April 2019 for businesses under the VAT threshold, many of our members will still be impacted with a costly and burdensome process of accounting from April next year.

“Many farmers will feel that this budget was a missed opportunity, particularly that the Chancellor did not see fit to extend capital allowances as part of the government’s productivity plans. Farming needs to invest to increase productivity so it can compete post-Brexit.

“Farming produces the raw ingredients for the UK’s largest manufacturing sector – food and drink – which employs nearly 4m people and contributes £108bn to the economy. For every £1 invested in farming, it contributes £7.40 back to the country’s economy; it’s time for the Chancellor and government to fully recognise British farming’s value for money.”