Home Business News The Budget that wasn’t as it failed to deliver for retailers and SMEs

The Budget that wasn’t as it failed to deliver for retailers and SMEs

by Thea Coates Finance Reporter
7th Mar 24 8:27 am

The home delivery expert ParcelHero, a champion of small retailers and SMEs, said that Wednesday’s Budget was more notable for its deafening silences than what was actually announced.

It says Chancellor Jeremy Hunt’s Spring Budget failed to deliver some essential and widely expected measures that could have made the difference between survival and closure for many SME retailers and small businesses.

ParcelHero’s Head of Consumer Research, David Jinks M.I.L.T., said, ‘This was the Budget that wasn’t, as far as many small businesses are concerned. Hundreds of SME retailers and local companies were waiting desperately for urgent reforms to their business rates, as well as specific tax cuts for those in the hospitality sector and on foreign tourists’ retail spending. It’s distressing that none of these widely expected reforms actually happened.

Business rates reform: ‘The Government has again failed to tackle business rates reform, leaving many retailers and businesses in a state of limbo. Businesses will find it hard to plan for the future until there is a proper solution to the vexed issue of rates. There was a woolly reference to further business rates support, together with £200m more for the post-pandemic Recovery Loan Scheme/Growth Guarantee Scheme. That’s not enough.

‘Business rates are charged on shops, pubs and other business properties based on their rental value. They devour a significant amount of most local shops’ annual turnover. News that film studios in England will get 40% relief on their gross business rates until 2034 is welcome but will do little to help our favourite local High Street stores.

Tourist Tax: ‘The Chancellor also pointedly ignored calls from retailers and business leaders to reinstate VAT-free shopping for overseas tourists. Tourists from overseas were allowed to reclaim the 20% VAT on their purchases in the UK until January 2021, when the tax break was scrapped by then-Chancellor Rishi Sunak. This has resulted in lost income for many stores in tourist areas and has impacted the entire tourism industry.

Hospitality tax cut: ‘Hospitality businesses had been calling for a cut to the 20% rate of VAT charged on pubs, bars and restaurants. The sector’s recovery from the pandemic has faltered significantly in recent months. Many industry leaders had called for a reduction back to the previous 12.5% rate that had helped businesses recover from the Covid crisis. The freeze on alcohol duty will be welcomed but won’t be enough to save many of our favourite pubs and eateries.

‘Of course, there was some good news for Britain’s small traders and manufacturers. The threshold for VAT registration will go up from £85k to £90k. That’s not as far as the £100k some were hoping for, but it’s still good news for many smaller traders.

‘Back in his Autumn Statement, Mr Hunt unveiled a £10bn tax cut for businesses that make capital investments in the UK, known as “full expensing”.  Now, following calls from business lobbying groups, he’s revealed that firms will be able to claim tax relief for leased assets as well. However, he ominously added “as soon as the Government can afford to do so”.

‘The £270m to advanced manufacturing industries, to grow “zero emission vehicle and clean aviation technology” will also be good news for businesses such as courier companies that are keen to further decrease their carbon footprints.

‘However, this was the Budget of what was not announced, rather than what was. As such, it will do little to increase the confidence of SME retailers, manufacturers and other businesses, as customers continue to struggle with the cost of living.

‘As retail settles to a new equilibrium, it will be those retailers with strong in-store and online sales that will ultimately triumph after a concerning start to the year.’

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