Mixed reaction to the spring budget

More tax cuts for working people, more investment and a plan for better public services were the key messages in Chancellor Jeremy Hunt’s ‘Budget for Long Term Growth’ today (Wednesday March 6).

However there was a mixed response to the measures among the business community.

Paul Falvey, partner at accountancy and business advisory firm BDO in the South West, said: “The Chancellor was under pressure to deliver tax cuts and while this wasn’t forthcoming for businesses, with some hoping there would be a reduction to corporation tax signposted, taxpayers will welcome the national insurance cuts announced.

“Despite being pitched as a Budget for long-term growth, there was very little for business. The only obvious winner being the creative industries. Employers will welcome the measures announced today around lifting the child benefit threshold to £60,000 as it will help employees. For smaller businesses, lifting the threshold for VAT registration to £90,000 will be popular despite being limited. The proposed extension of full expensing to leased assets may also encourage investment by businesses in the region. 

“It will be interesting to follow the consultation around the “British” ISA which could bring an additional £5,000 tax free allowance for individual investors but should also help to stimulate investment in regional growth businesses across the UK.”

Country Land and Business Association President Victoria Vyvyan said: “The CLA is pleased the government has listened to our calls for agricultural property relief to be extended. This is welcome news and will help farm businesses deliver environmental benefits as well as food production.

“But it’s not all good news. Rather than helping the tourism sector by permanently reducing VAT to make rates internationally competitive, the Chancellor is squeezing holiday let owners and stifling businesses that create jobs and support the rural economy.

“By converting unused or underutilised properties, that may not be suitable as homes in the private rented sector, into high-quality holiday accommodations, property owners contribute to the local community's economic vitality. Targeting them will not help solve the housing crisis.

“The current tax rules for Furnished Holiday Lets provide a crucial support mechanism, strengthening the resilience and viability of many farms and rural businesses that in turn enables them to invest in their work looking after the environment and feeding the nation. Abolishing the tax relief shows a disregard for small rural businesses that often have narrow margins and face a constant need to reinvest.”

Sue Robinson, Chief Executive of the National Franchised Dealers Association (NFDA), which represents franchised car and commercial vehicle dealers across the UK said: "It is concerning that once again the Chancellor has failed to fix the existing, unworkable Apprenticeship Levy in this latest fiscal event. The motor retail sector experienced its highest vacancy rate in 2023.

"The sector currently is grappling with an intensifying skills shortage, which a reform of the Apprenticeship Levy could help alleviate. NFDA has consistently called for the Government to remove the claw-back cap and simplify the Apprenticeship Levy application process to enhance the utilisation of the capital locked into the levy. This will in turn assist dealers looking to recruit the next generation of apprentices.” 

Federation of Small Businesses (FSB) Policy Chair Tina McKenzie said: “We welcome today’s increase in the VAT threshold as well as the cut to self-employed National Insurance Contributions (NICs).

"Elsewhere, we were pleased to see a package of small business support in the Budget documents, including commitments to make progress on the HMRC administrative burden and on the national roll-out of the Business Energy Advice Service, as well as extending the Recovery Loan Scheme under a new name - the Growth Guarantee Scheme. Small firms are crucial for economic growth, and we were glad the Chancellor said that clearly from the despatch box.

 “That said, many of those running businesses face serious challenges – not least through rapid hikes in labour and input costs – and many will have understandably hoped that there would be more measures announced today that would help ease the tough decisions small employers are having to make day-in day-out to keep their businesses going."