Business leaders in Wales and beyond have welcomed many of the measures announced by the Chancellors budget.
In his first Budget, Rishi Sunak pledged extra help for the high street, gig economy workers, and SME's.
Richard Murphy, head of Cushman and Wakefield’s Cardiff office, said:
“A Conservative Budget that proposes to increase borrowing, provided it delivers medium-term structural benefits in the public realm, is likely to prove positive for the property sector in Wales. Welsh Government’s response will be of interest, particularly in relation to roads and motorways, given last years’ abandonment of the M4 relief road announcement and in any clarification provided on its own stance in regard to business rates reform.”
The Chancellor’s spending pledges did not allow him much room for tax cuts, and they were unusually thin for a Conservative Budget. The most significant was a raising of the National Insurance threshold and the continued freeze on fuel duty, which will be welcomed by rural businesses in Wales. On the other hand, tax relief on red diesel will be abolished, apart from for farming, rail, fishing and domestic heating.
Duties in cider and wine are also frozen, and a planned increase in beer duty cancelled, in moves which will help pubs.
There had been talk that entrepreneurs’ relief would be abolished. Instead, the Chancellor has chosen to reform it, reducing the lifetime limit from £10m to £1m. This is the most significant tax raising measure in the Budget, raising £6bn.
Tax director for PwC’s West and Wales region Lee Waterson commented:
“Given that it was an emergency Budget in all but name, the Chancellor has understandably focused on meeting the challenges of the coronavirus head-on to the tune of £30bn without a number of significant tax rises. But this was also a Budget that went some way to meeting the Government’s election promises on ‘levelling up’ the country.
“One of today’s changes which may impact a number of entrepreneurs here in Wales is in respect of Entrepreneurs’ Relief. While not meaning complete abolition, it amounts to a 90% reduction and could cut the tax relief that business owners were expecting when selling their business by £0.9m. This takes us back to when the relief was originally introduced in 2008. However, with more than 1,000 reliefs in the tax system, the Government may want to look more broadly at how it provides incentives for employees and business owners.
“For our region, Welsh Government will receive an additional £360m investment to help support economic growth within our nation. Wales will also get a share of the £200m set aside for local communities to build flood resilience, and £12m will be spent in South Wales on full-fibre broadband. These amount to a very welcome economic boost, along with the announcement of a new Treasury office to open in Wales, as regional investment under this Government gets underway. Innovative Welsh companies could also benefit from the increase to the Research and Development Expenditure Credit, where the rate will increase from 12% to 13% from 1 April 2020.
“There’s time yet with a promised Autumn budget for the Chancellor to be more radical and consider giving more tax-raising powers directly to the regions – this would really deliver on the mindset change he is looking for to ‘level up’ the regions.”
Chris Sutton, Director at Sutton Consulting Ltd
There are a range of measures which will clearly help improve the business environment including additional funding for innovation, infrastructure, regional growth and R&D funding. Many billions were committed for UK-wide R&D, innovation and science. If allocated on a challenge basis, this will require Wales to up its game in terms of pitch presentation.
Many fiscal measures are devolved and a decision therefore needs to be taken by Welsh Government as to whether to match these. For example, the attractive rate reliefs and rebates announced by Mr Sunak for SMEs and lower value properties on the High Street in England were very well received. Cardiff Bay will now need to weigh up the cost to Wales of matching these announcement, not least reflecting on the additional cost arising from a higher proportion of lower value properties, against the political cost of not matching this.
Elliott Buss, partner at UHY Hacker Young Newport, said:
“Following today’s Budget, many will be asking what the Chancellor’s announcements means for Wales? Setting aside plans to tackle Coronavirus, it looks thin on the ground. It was confirmed that corporation tax would remain at 19% as promised in the manifesto. While this is still the lowest rate in the G20, one could wonder if we’ve missed an opportunity to attract increased inward investment by dropping to 17%.
“It was reassuring to see that Entrepreneurs’ relief has not been entirely lost. Yes, the lifetime limit for the 10% tax rate has been dropped to £1m from £10m, but this relief has been heavily criticized in the past, so a reduction today is better than scrapping it all together.
“It was also interesting to note that, despite not having much of a mention today, the Chancellor has raised the threshold for tapering down pension contributions from £110,000 to £200,000. At face value you can look at this as just a benefit for high earners, but could it in fact have been created specifically with doctors in mind?”
“Last, but not least, we have the end of the hated ‘Tampon Tax’ and the abolition of VAT on digital publications. Both taxes were nonsensical, but their end signifies more than a popular common-sense decision. Surprisingly, this is actually one of the first instances where we see a change that steps away from EU mandated policy to UK defined rules.”
Lucy Cohen, the founder of Mazuma, said:
“On the surface this looks like a fairly business-friendly Budget, as well as announcing increases in spending in a range of other areas that seem in desperate need of investment.”
“Statutory Sick Pay has been at the front of people’s minds. Currently, employers bear the cost of SSP for their staff and it kicks in after 4 days.
“Today, the news arrived that not only will SSP be payable from day one, but that businesses with under 250 employees will be able to reclaim the cost of SSP for up to 14 days per employee.
“That will be a huge relief to small businesses who may struggle with cash flow as well as to staff that would be concerned about self-isolating for financial reasons.”
“Great news for shops and cafes and it could help to revitalise many a struggling high street in the UK as well as provide some relief during the uncertainty of Coronavirus,”
Gavin Wraith-Carter, Managing Director at Hitachi Capital Business Finance: “We welcome the Government's proposals to introduce any helping hand to the UK’s smallest businesses. Cashflow remains one of the biggest problems for any small business, but the effects are more keenly felt the smaller the business. Our own research shows that 30% of businesses with less than 50 employees are kept awake by cash flow worries rising to 32% among businesses with fewer than 2 employees. These businesses could feel the benefit of today’s announcement.
“However, while this will provide some relief in the short term, larger issues remain that continue to affect all businesses’s ability to plan for the future. A clear steer on the impacts of Britain’s exit from the EU, and what this means for individual businesses, is still needed and is far more important to British business in the long term.”
Commenting on the Chancellor’s UK infrastructure plan, CITB Policy Director, Steve Radley, said:
“The promised investment will create the need for tens of thousands more workers in Britain’s construction sector. This will require a major upturn in the number of apprentices and trainees; government will need to work closely with industry to deliver this.
The huge pipeline of work will provide a unique opportunity for government to drive modernisation in how we build, encouraging the adoption of Modern Methods of Construction that will improve productivity in a much tighter labour market.”
British Insurance Brokers’ Association (BIBA) CEO, Steve White, said:
“We welcome new Chancellor, Rishi Sunak’s approach to Insurance Premium Tax (IPT). Not changing the current rate – already at a significant 12 pence in the pound of every premium paid will help businesses and consumers to afford the insurance protection they need We will, however, bear in mind that the Chancellor has not explicitly frozen the rate and we will continue to campaign for Government to freeze, if not reduce, the rate of IPT for the remainder of this Parliament.
We will also continue to highlight to the highest levels of Government the dire consequences of a tax that potentially reduces access to insurance. In our 2020 Manifesto – Access, BIBA highlighted research by Zurich that shows a correlation between steady increases in IPT and a decline in the uptake of insurance. Because of this, as well as freezing the rate we believe targeted tax relief on both cyber insurance and telematics-based motor insurance would alleviate this trend.”
Paul Galligan, Chief Executive of Bionic, the business switching service, said:
“The new Chancellor has put it all on the line for the UK’s SMEs at a critical time for the UK economy. Delays to the time to pay services, the roll out of a new Coronavirus Loan Service, the temporary abolishment of business rates for specific sectors and a £3000 cash injection for small businesses across the country will create a much needed safety net for hard-working SMEs up and down the country. It remains to be seen how quickly businesses can access the cash injection and be repaid having claimed compensation for sick pay. It is vital that government services are swift. Overall, though, SMEs needed a turbo-charged response to the crisis, and it looks like they've got it.”
John Ellmore, Director of Know Your Money said “The Government’s move to support the self-employed offers some much needed assurance to those that make up the expanding gig economy. What’s more, emergency support to help businesses implement self-isolation measures is welcoming.
“That said, we are still left wondering as to what the long-term solution will be. Should the Coronavirus outbreak worsen, just how much assistance can the Government realistically provide to help businesses and their employees?
“Let’s not forget the financial challenges that self-isolation can also pose to workers. It is estimated there are 2,000,000 people in the UK with no sick pay who may not be able to afford two-weeks of self-isolation. For those who find themselves in this position, I’d advise speaking with non-profit organisations such as Citizen’s Advice to ensure they are on top of their finances.”
Yiannis Faf, co-founder of WhatWeWant said “Digital connectivity is vital to the growth of the UK’s tech sector, not to mention the UK’s economy in general. It will allow regions across the UK to strengthen their local economies and, indeed, inspire a new generation of tech entrepreneurs. After all, the ambitions of budding tech entrepreneurs should not be quashed, simply because they do not want to move to London.
“Increasing investment is one thing, but we now need a clear plan and schedule for the roll out of gigabit-cable broadband. This is a long-term project, and only by offering a clear implementation strategy will tech businesses and entrepreneurs have the confidence to plan for the future.
“Given the plethora of economic benefits such an initiative will provide to the wider economy, the Government can’t afford to keep putting digital infrastructure on the back-burner. We are globally renowned for our bustling tech scene so let’s ensure the necessary support is being provided.”
Nic Redfern, Finance Director of Know Your Money said: “Given the unprecedented financial pressures facing the UK high street, it was pleasing to see the Chancellor announcing a cut to business rates – according to Know Your Money research, 66% of retailers are in favour of such a measure.
“This will provide much-needed breathing space for smaller and medium-sized retailers who have been struggling to stay afloat, though one cannot but think this is too little too late.
“Unfortunately, we are not out of the woods yet. Faced with the immediate challenges posed by the Coronavirus outbreak, not to mention the ongoing uncertainty surrounding Brexit, retailers are in for a very difficult trading period. That’s why I hope cuts to business rates is the first in a series of measures the Government will be introducing to alleviate the financial strains being placed on our businesses.”
Ritam Gandhi, Founder and Director of Studio Graphene, said: “Boxed in by the ensuing Covid-19 public health crisis, today’s Spring Budget was less an economic policy overhaul in the wake of Brexit, and more a holding operation as the government scrambles to lay out a crisis prevention strategy. But while the announcement might have been less punchy than expected, it was nonetheless reassuring to see that small businesses haven’t been overlooked in the government’s contingency plans; Sunak has offered his commitment to help businesses manage their cash flow as they deal with any financial fallouts experienced from Covid-19.
“Tax commitments that were contained in the Conservative Party’s manifesto have also been given the nod. Entrepreneurs’ Relief, which has been criticised for disproportionately benefitting wealthier entrepreneurs and failing to deliver on its objective – to incentivise people to create new businesses – is set to be revamped. I believe tax breaks are incredibly valuable for business leaders, but we must ensure that they serve to benefit everyday entrepreneurs and not just a select few. The EIS and SEIS should be used as inspiration for policies introduced further down the line.
“There’s no doubt that today’s challenging economic environment has had some influence on the chancellor’s speech. Nonetheless, the government should not forget the important role the UK’s early stage businesses play in driving productivity and leading innovation. The commitment of £130 million of new funding to extend Start-up Loans is a good first step, but it must be the first in a series of measures aimed at providing the support required for startups to raise the capital they need to both launch and scale – particularly in these testing conditions.”