Chancellor Rishi Sunak set out his Budget and the results of his Spending Review today, Wednesday 27th October 2021. H M Treasury also published the Final Report of the Government’s Business Rates Review, some conclusions of which were announced in the Budget.
Responding specifically to the £130 million fund for small businesses, Paul Slevin, President of Chambers Wales, said: “SMEs are the lifeblood of Welsh business and play a vital role in the growth of our economy. This multi-million-pound commitment to specifically support small and medium sized businesses in Wales is a welcome investment to enable future growth, particularly after the challenges of operating throughout the pandemic.
“We understand that the fund will be delivered through the British Business Bank and it is essential that we now receive clarity on eligibility criteria, funding channels and how to access support to ensure that as many SMEs as possible can benefit from this funding opportunity.
“We look forward to speaking with industry leaders over the coming weeks to better understand the implications of the budget for their business and how we can assist them to unlock their growth potential.”
Andrew West, Business Rates Director at Cooke & Arkwright said, “A positive point from the Budget is the move to three-yearly revaluations from 2023, which will help to ensure that there is a closer relationship between the tax base and current property values.
“The freeze of the multiplier and the 50% tax cut are also welcome news. However, the Budget announcements and the details in the final report are once again sticking plasters that do nothing to address the excessive complexity of the system that prevents businesses from understanding if they are eligible for relief and exemptions, and how to claim.
“The RICS, Rating Surveyors Association and IRRV engaged positively in the consultation process and made constructive and realistic suggestions for change that would be to the benefit of all business rate stakeholders. Much of what we have suggested has been ignored.
“In particular, the retention of the multiplier of around 50% is extremely disappointing, as the broad consensus is that this is far too high a tax burden. We have been asking for this to be reduced to 30-35%.
“We are also disappointed that the downward transitional burden in England has not been scrapped, as we have called for. This is where businesses in England see reductions in their business rate bills following revaluation phased in, rather than receiving the immediate benefit. Transitional adjustments do not apply in Wales and Scotland, where bills change immediately when they go up or down following revaluation.
“As the Chancellor states in this document, this is the final report and is the roadmap for the coming years. Far from being the major reform it originally set out to be, we have to resign ourselves that little has changed yet again in a business rate system that remains divorced from a fast moving, dynamic economy.”
Commenting on the UK Budget Statement, Ben Francis, FSB Wales Policy Chair, said:
“The budget was a bit of a mixed bag for small businesses in Wales.
“Plans to reform alcohol taxes and freeze fuel duty will be welcomed by some in business, and it’s positive the Chancellor has heeded FSB’s call to introduce investment reliefs for businesses adopting green technologies.
“However, the Chancellor could have reduced payroll taxes or taken the edge off non-domestic energy bills. An extension of the employment allowance would help alleviate the impact on businesses of the upcoming raising of National Insurance contributions.
“Local and independent firms struggling under the weight of covid debt and spiralling utility costs won’t have heard much on how this Budget will address their immediate concerns.”
Quantum Advisory noted that a Budget intended to help drive economic growth as the country recovers from Coronavirus also brought welcome changes for the pensions world including pension tax top-ups for low earners and changes to the charge cap on defined contribution schemes.
Speaking about the tax top-ups, Simon Hubbard, Senior Consultant and Actuary at Quantum Advisory, said: “Industry commentators have been asking the Government for years now to resolve the unfair tax treatment of pension contributions by low-paid workers. This change will be welcomed by many, though it’s disappointing that it will not apply until April 2024. However, the bigger question of increasing the auto enrolment minimum contribution amounts has been avoided for a further year.”
Catherine Lewis La Torre, Chief Executive, British Business Bank, said: “The package the Chancellor has announced today enables us to build on our range of programmes to support sustainable economic growth by increasing the supply, diversity and demand for finance for UK smaller businesses.
“This includes delivering a new £130m fund dedicated to supporting smaller businesses in Wales. We look forward to working with the Development Bank of Wales and local stakeholders to deliver this increased support.
“We also welcome the £150m provided to support regional angel finance across the UK, and resources to provide 33,000 Start-Up Loans over the next three years.”
Head of ACCA Wales, Lloyd Powell, looked at the impact of the Budget on SMEs, tax, skills and the climate crisis.
He said: “As we build back the Welsh economy after the pandemic, we welcome the additional funding for Wales announced today to support business, skills development, people and communities, including the funding for the British Business Bank to establish a £130 million fund in Wales, helping Welsh businesses get the funding they need. Confirmation that total funding will, at a minimum, match the size of EU Funds in Wales each year through the Shared Prosperity Fund is also welcomed. A joined-up approach between the UK and Welsh governments is needed to ensure effective and efficient delivery of programmes to support Wales and the Welsh economy, with a greater focus needed to support SMEs’ access to green investments and business planning.”
SMEs
“We are concerned about pressures building on small businesses, which are now faced with repaying tax on the £20 billion plus worth of grants and support they received to keep them afloat during the early stages of the pandemic until April 2021. This huge tax demand will hit companies which are just regaining profitability and adds to squeezes due to increased tax on dividends and employers’ National Insurance for the Health and Social Care Levy.”
TAX
“We are disappointed that today’s budget did not take the opportunity to support the tourism and entertainment sectors further by keeping their VAT rate at 12.5% beyond next April and for the remainder of this parliament. A lower rate of VAT would help ensure people keep coming through the doors regardless of locality or size of the business.
“Historically, the UK has had one of the highest VAT rates for these sectors across Europe and we have shared our fear with the Treasury that returning to a rate of 20% within months has the potential to inflict huge damage on an already struggling sector and make many businesses unsustainable.
“While the Chancellor has announced cuts in business rates for the retail, hospitality and leisure sectors in England, we await the Welsh Government’s draft budget later this year for details regarding further business rates support in Wales.”
CLIMATE CRISIS
“We welcome the Chancellor’s statements about government and business investment in green technology and job creation, but we haven’t heard any details about enabling the broader skills needed to make this a reality. We need to invest in skills, reskilling and continued learning to ensure the government achieves maximum impact and value from green investment. Finance teams can help their organisations to plan, measure and report on their efforts to reach net-zero.”
SKILLS
“We would like to hear more from the Chancellor about greater investment in skills development. It’s more important than ever that the UK has a strong pipeline of professional and ethical business advisors, as we seek to boost productivity and take advantage of new opportunities.”
