Chancellor’s Spring Budget Announcement Disappoints Business Community
Speculation surrounding the Chancellor’s Spring Budget has been rampant since the beginning of the year. On Saturday, March 16, 2024, business leaders and owners across the country eagerly awaited the announcement, with many hoping for some relief on business rates. In fact, several leading trade bodies co-wrote a letter to the Chancellor, urging him to use the predicted inflation rate of 2% to set the standard multiplier, rather than the September 2023 rate.
However, their hopes were dashed when it was announced on March 6 that the standard multiplier would indeed increase, as previously announced in November. On April 1, commercial properties with rateable values (RV) of over £51,000 will see a 6.7% increase in their business rates, in line with the September 2023 inflation rate. This is over triple the predicted CPI inflation rate for the second quarter of 2024, which is 2%.
While tax cuts were a predictable certainty in the budget, the specific taxes to be cut were up for debate. The decision to further cut National Insurance (NI) tax came as a surprise, especially since the NI tax cut from the 2023 autumn budget had already come into effect in January. It was clear that the decisions made in this budget were driven by the government’s focus on building their voter base, rather than supporting businesses. Experts estimated that a further 1% tax cut would cost £4.5 billion, but the actual NI tax cut of 2% will cost around £10 billion to fund.
While the NI tax cut may benefit individuals and businesses by reducing the tax burden per employee, it is overshadowed by the 6.7% increase in business rates. RVA Surveyors estimate that using the 6.7% inflation rate will add over £1.5 billion to business rates tax bills from April.
This increase will have a significant impact on anchor stores, who already face higher outgoing costs than many independent retailers. With the current cost of living crisis, these costs have become astronomical. Despite the slowing down of inflation, there has been no relief on their outgoing costs.
Anthony Hughes, Managing Director at RVA Surveyors, expressed his disappointment with the increase, stating, “This is the second increase in just 12 months – and at nearly 7% as well. While an increase in the multiplier could have been expected or reasoned by a lot of people, it doesn’t mitigate the fact that already at the beginning of this rating list, the multipliers were not lowered as per usual. And now somehow businesses are expected to accept another increase to an already historically high tax.”
Although local authorities and councils do offer relief and support to eligible businesses, larger businesses often do not qualify or have stricter limitations. For example, the Retail Hospitality and Leisure relief (RHL) has a cap of £110,000 across all properties. This is not enough to offset the upcoming 6.7% increase for many larger businesses.
Hughes added, “This increase is yet another burden for commercial property owners and tenants as they navigate ever-changing and unstable markets for the majority of industries. Business owners and leaders have every right to be angry, especially larger businesses who are only eligible for minimal support.”
While small and medium-sized companies have access to various forms of support, it may not be enough to combat the challenges facing businesses and individuals in a constantly changing landscape. For many businesses, the upcoming business rates hike will be their second increase in just twelve months, leading them to question if this will be the last straw.
This news story was distributed by https://pressat.co.uk/.
