With just over a week to go until Rishi Sunak’s crucial Budget presentation, we asked a group of business leaders from a variety of sectors which ranges from accountants, insolvency practitioners, solicitors and marketing agencies to tell us what they expect to see and what they hope will be announced.
Gareth Smyth, CEO of Hilton Smythe (Business Brokers)
Firstly, it is imperative that the chancellor leaves Business Asset Disposal Relief untouched and keeps the already significantly reduced allowance as it is. Those looking to exit their businesses after years of hard work should continue to receive relief on capital gains tax.
Furthermore, high street businesses are facing more and more trading difficulties, not least with COVID but even before the pandemic. Bricks and mortar retail is about the experience, being able to touch, feel and try out items. I don’t think that will ever change, but there has to be a reason for people to get out and support their local businesses. The government needs to think about incentivising businesses onto the high street again once the pandemic is over.
The introduction of an online sales tax may help in curbing the volume of businesses that take their sales online, however, it probably isn’t enough. The high street needs the support of people locally to survive.
Ben Cowgill – Director of Insolvency Experts (part of Cowgills)
Lockdown restrictions implemented over the last 11 months has contributed to the acceleration of failures on the high street. Footfall had already been declining as online and out of town shopping had increased, but covid was the final straw for many ‘non-essential retailers’ with reduced turnover, ageing stock, and changing shopping habits.
Existing tenants are likely to see a further reduction in footfall as shoppers who visited the high street to visit particular stores such as Topshop and Miss Selfridge will no longer do so. With supply of retail units now outweighing demand, it remains to be seen whether landlords and the government will take action in an attempt to attract people.
We have recently seen the collapse of large retailers including Arcadia Group, Debenhams and Bonmarche, I envisage further casualties unless landlords align rents with current market conditions, and the government create a permanent level playing field on rates with online retailers.
With reliefs soon to end, and an expected decrease in disposable income for shoppers as redundancies increase, retailers will be sure to focus on a reduction in rents as they attempt to recover and re-strategise.
Landlords have been vocal in their resistance of such attempts, but it may be unrealistic and uncommercial for that stance to continue. It will only result in further formal insolvency processes including CVAs.
Dale Politt – Director of Ryans Accountants
After such a turbulent year since the outbreak of COVID-19 it has been suggested that the budget will be relatively “low key”. This would make sense as the government needs to support businesses to get back on their feet after a tough period whilst improving consumer confidence and therefore spending.
However, there may yet be implications for certain groups of taxpayers. Capital gains tax has long been considered too low and there appears to be a long term goal to bring this in line with income tax rates, as was suggested by the office of tax simplification. This could be particularly bad news for business owners looking to exit only heightened by the recent reduction of Entrepreneurs Relief lifetime limit – which could be reduced further or even completely scrapped over the coming years.
An additional form or rate of corporation tax for larger entities especially large online retailers would likely be well received by the public.
The 5% reduced vat rate for leisure and hospitality is likely to be extended into the 2021/22 tax year.
Whilst the stamp duty “holiday” for residential properties under £500,000 value is due to end this March but this has been extremely successful in vitalising the property market and may be extended. Another factor in this is the huge delays for legal teams and the land registry which may prevent deals from being executed in good time, again suggesting an extension is necessary.
Vat makes up a huge part of treasury income and a small percentage increase here would potentially net large amounts of additional income. The government will need to consider this carefully however, as increased vat rates are ultimately passed on to end users and consumer confidence, spending could fall as a result.
Graham Davies – Addition Finance (Business Accountants)
Whilst we expect to see an extension to the stamp duty holiday, and extended business rates relief, tax increases will be the overarching theme. Increased income tax via stealth taxes (such as freezes in personal allowances), and tax hikes for profitable companies are expected. It’s unlikely that there will be any winners this year!
Dr Elaine Garcia – Head of Academics at Interactive Pro (Online Education Platform)
We expect the Budget to be a fairly moderate one. It is unlikely to be the time to increase taxes, a move that has been signalled as being required in order to start to recoup some of the spending made in recent months.
We are likely to see schemes such as the ‘Eat Out to Help Out’ scheme re-introduced and a possible continuation of the freeze of VAT for tourism and hospitality. There could be increases in capital gains tax and corporation tax as well as on tobacco and gambling.
Ben Taylor – Director of Home Working Club (An online portal for home workers and freelancers)
As a limited company director, I would obviously like to see some kind of support to reflect everything sole traders have been entitled to, but I have all but given up hope of that.
What I would be happy to see is some kind of grant funding to encourage experimentation and innovation. I suspect many small businesses are running in “save and prepare” mode – playing it safe and preserving the funds they have.
Something that would allow us to branch out with minimal risk might get many people’s creative juices flowing.
Nicola Whittle – Corporate Partner at Brabners (Law Firm)
Continued COVID support will likely take centre stage at the Chancellor’s spring Budget. While the roadmap out of lockdown restrictions has provided a timeline for businesses to plan around, no one can be sure how smooth the road ahead will be.
Based on existing briefings, it’s a safe bet that the government will extend the furlough scheme into the summer until the economy is fully re-opened. It’s also likely that Rishi Sunak will announce a further business rates holiday for the hardest-hit sectors, including retail, hospitality and leisure as an added contingency.
Many businesses will be facing immense challenges, including poor cashflow and looming debt deferrals, so government support is vital.
While plans to reduce the UK’s COVID debt should crystalise in the November budget, we’ll no doubt see the Chancellor begin to chip away at the pile in next week’s announcement. The
government has already spent £280bn on COVID support schemes to date, a figure which continues to swell. It’s widely mooted that the Chancellor will set out a staggered increase to
corporation tax from 19p in the pound to 23p in the pound by the next general election in 2024, which will raise an expected £12billion in total.
From autumn, businesses would see a bill increase of at least 1p, at a cost of £3billion overall. This hike will inevitably be met with backlash from some circles who will feel the Chancellor should focus on encouraging business investment and growth as a driver for the UK’s economic recovery.
Rob Williams – Director of Hawthorn International (Clothing Manufacturers)
As a manufacturer working with startups in the clothing industry, one of things we would like to see change in the March 2021 budget is a reduction on import tax faced by small clothing brands who work with overseas factories. Since Brexit, the advantage of using factories in the EU has diminished as small brands now face import fees on their stock. Large scale clothing manufacturing isn’t in abundance in the UK, and we fear that these tariffs will see small businesses who are already operating on small profit margins, go out of business due to an increase in the cost of their stock.
More people have decided to start businesses as a result of the Coronavirus pandemic, and small businesses having to deal with increased costs due to the Brexit vote could serve to diminish the numbers of people who choose to carry on in their business, something which could in turn damage the UK economy. Reducing import fees for small businesses would be a great way to help support start ups.
Matt Tomkin – Director and Founder of Tao Digital Marketing (Digital Marketing Agency)
COVID has accelerated digital transformation by five years due to the huge amount of businesses who have been forced to move their services online in order to survive. However,
businesses operating solely online are required to pay a significantly lower amount of tax compared to businesses that have trade depots or a high street presence.
Business rates are an unfair tax – the system needs a complete overhaul to account for the larger amount of businesses now operating online. In order for businesses to try and become more efficient, they need to look at investing in their online platform as well as examining where the business is positioned so that they can get the best business rates possible.
Jenny Knighting – CEO & Founder at Nutcracker Agency (Marketing Agency)
Realistically, the Government will need to bring in measures that will aid the recovery budget – I suspect National Insurance contributions will rise and corporation tax may also be increased. You cannot spend the amount of money that the government has done over the past 12 months without needing to claw back costs.
Companies can prepare by focusing on their new plans and stabilising and securing their businesses, without getting sidetracked by whatever measures are announced. This year, more than ever, business owners must be focused on marketing their businesses and securing growth.
Mehran Cherania – Director of Ready Steady Store (Storage Units business)
We want to see questions answered on if the stamp duty land tax (SDLT) exemption will continue and be extended, or if it will end in March. Homebuyers are racing to complete their sale by the end of the extension, and a short extension to the break will help an estimated 100,000 buyers (according to Rightmove stats) avoid an unexpected tax bill.
We also want to see input on the furlough scheme – ideally the government will be helping to support those affected by the lockdown for longer, and help make the period of coming out of furlough seamless. The public confidence is going to be impacted by the decision that the government makes, and ensuring unemployment doesn’t rocket upwards once furlough ends will be key to this.
Paul Gibbens – Property Specialist at Housebuyers4u
The Coronavirus Pandemic has cost the Government billions and thus really need to balance the books. They may well be an extension of the Furlough scheme, with business rates relief and of course tax hikes for sure as someone has to pay for the intervention!
Perhaps a stealth tax or wealth tax targeted towards the wealthy. Corporation tax may well increase alongside the Capital gains tax.
There may well be some more grants available for the self-employed and smaller businesses particular in the hospitality and retail sector, which have been hit the hardest.