Member Article

Budget 2015: South East business reactions

With 50 days to go until the General Election, Chancellor George Osborne delivered his sixth Budget this afternoon. Bdaily asked businesses in the South East for reactions to this all-important March statement.

FUEL DUTY

Alistair Bingle, managing director at Chessington-based Bishop’s Move, the UK’s largest family owned removals company said: “The announcement on fuel duty comes as an unexpected yet very welcome surprise to the removals industry. Coupled with plans to introduce new planning measures aimed directly at addressing the housing shortage, then this has been a very successful Budget for the UK housing market.

“Let’s not forget this also follows much needed stamp duty reform in the Autumn Statement. The fuel duty freeze gives industries, such as haulage, the breathing space in which to plan and grow over the next 18 months and thus, create more job opportunities.

“Faced with the traditional pre-general election slowdown, the housing market is now firmly placed on a sound footing to get people moving now which will ignite the economy at just the right time.”

INCOME TAX

Peter Burgess, managing director at Retail Human Resources, a London-based recruitment company specialising in the retail sector: “The greatest reform this government can claim credit for is the substantial help given to the working poor. This has made a significant difference to millions of people and the fact this was done at a time when the country was in financial problems makes it all the more an achievement.

“For all of that though, they need to go further. National Insurance payments by both employer and employee should be raised too. Too many employees provide work only for the amount of hours that keeps employees below the NI threshold. So you have people working just 16 hours and then getting it topped up with benefits. This is mad.

“The goal should be that anyone on a 40 hour week on minimum wage should be pay tax or NI and nor should their employer. This will in part be self-financing because it gets more people off benefits. If the economic case isn’t overwhelming then surely the moral case is.”

TAX AVOIDANCE

Vince McLoughlin, partner at West Sussex-based Russell New, a firm of business and tax advisors said: “Anti-avoidance tax measures had to be featured, especially within this Budget so close to a general election.

“This is a simple way to demonstrate to the general public that the Chancellor is tough on those trying to avoid paying their fair share at a time when paying tax has become a moral issue and the funds raised can be used to pay for the other appealing measures.

“From an SMEs perspective, without clear and concise guidelines and rolling updates on exactly what is allowable, many were faced with the fear of potential legal and fiscal consequences, therefore were becoming more and more reticent to take advantage of the tax breaks available.

“These types of concerns, whilst reasonable in light of recent history with tax avoidance amongst multi-nationals, can put them under unnecessary financial pressure rather than giving them the freedom they need to grow.”

PENSIONS

Chichester’s Michael Ward, managing director of specialist comparison website PayingTooMuch.com said: “As a South East business we feel optimistic about many changes in the budget, with the pensions changes being particularly relevant to our customers. Finally, government has realised that its sweeping pension reforms have left some people caught in a trap.

“We’ve been contacted by members of the public in the South East who are distraught because they have fallen into the cracks of the new legislation, and old and annuity providers are unable to help them. Now there could be light at the end of the tunnel for soon-to-be retirees who, under the announcement today that a consultation will be published to allow existing annuity policy holders to sell or change their product, could be able to benefit from the new pension freedoms.

“Currently 5 million people are locked into annuities they have already bought and cannot benefit from the raft of pension changes that come into effect on 6 April. However, unfortunately for those annuity holders, despite the government having listened to the consumer cries, the jury is still out on whether existing annuity holders can benefit from the new pension freedoms as selling their current annuity could be difficult.”

HOUSING

Michael Bruce, CEO of Purplebricks.com, said: “Lifting restrictions for existing pensioners will further add to the potential of a mini housing boom in the South East of England, fuelled by people taking out money from an annuity and investing it in property.

“The British see property as ‘safe as houses’ when it comes to investment and although there are tax implications if people take too much out in one go, there’s little doubt that for many it will make financial sense. This also provides an opportunity for retiring parents and grandparents to help their first time buyer children and grandchildren get on the property ladder whilst providing them with an income.

“The impact of the changes to stamp duty last November are still being felt, with the South East market under £937,500 feeling the benefits of paying less and the market above that feeling the pain. “Introducing a Help to Buy ISA for first time buyers shows the government is anxious to ensure this policy has been a success and give some hope to the cash-strapped first time buyers.”

Rick de Blaby, chief executive of London developer United House Developments, said: “Cutting the red tape strangling London development is key to this announcement. The Chancellor and the Mayor need to ensure that the delivery of public sector land and brownfield sites to developers is backed by an efficient, lean machine to free up this land to avoid the delays currently snarling up the system.”

Nicholas Leeming, chairman of estate agents, Jackson-Stops & Staff, said: “London’s status as a global financial centre is dependent on being able to attract the brightest and best young professionals to work in the capital.

“The Chancellor’s move to cut red tape to create more homes is essential if we are to continue to see people living relatively close to their workplaces.”

Adam Lawrence, chief executive of developer London Square, said: “We now need rapid action on delivering homes in the capital, not lengthy bureaucratic deliberation on the best way to make this happen. The land for new homes in London is all around us. We need to unlock it quickly before we lose another generation to renting rather than buying a home so they can work and live within a reasonable distance in the capital.”

SMALL BUSINESSES

David Gibbs tax partner at Alliotts Chartered Accountants and Business Advisors, based in London and Surrey, said: “The theme of this budget was based on the strength of the economy ‘Britain has a long term economic plan that is working and needs to stick to it’.

“Key highlights for businesses in the South East include abolishing Class2 NIC altogether for the self- employed, abolishing tax returns for small businesses, which means that by 2016 millions of small businesses will not need to complete returns in their current format, significantly easing red tape. But watch out, this may mean that small businesses will need to pay their tax bills quicker.

“A review of the business rates system was announced which must surely help small shops in the region, where we have seen a rise in the number of independent retailers return to the High Street. Film and video games businesses in the South East will receive a further boost as a result of the extension of existing tax credit and local micro-breweries will benefit from the reduction in beer duty for the third year in a row, which has already helped the industry and generated local employment.”

Bill Fox, Kent and Medway regional chairman, Federation of Small Businesses, said: “Our members will be encouraged by some of today’s announcements. The review into business rates is long overdue. When complete, it must deliver tangible benefits to businesses and not end up as just another report that sits on the shelf. The commitment to raise the Annual Investment Allowance to an appropriate level will provide the certainty needed for businesses to plan and invest - something badly needed if the UK is to raise its productivity.

“We are especially pleased that the idea for a single digital tax account is being taken forward. This is something we have long advocated – featuring prominently in our 2015 Business Manifesto. This should reduce the time businesses take to complete their tax returns, and offers opportunities to deliver targeted support. The abolition of Class 2 National Insurance contributions for the self employed is also a welcome step.

“There were some helpful measures to help with getting connected. The extension of the superfast connection vouchers will help some small businesses in more urban areas but in Kent we certainly want more. Access to superfast services is a key requirement for small businesses. Delivery of this strategy will be critical to future-proofing the national and Kent economy.”

BUSINESS RATES

Ruth Duston, chief executive of The Northbank Business Improvement District, said: “We welcome the Chancellor’s comments in the Budget which support businesses, notably the commitment to expanding high speed broadband and the Business Rate Review. “As the voice of the businesses we represent, we have spotted the potential for Business Rates to be reformed and we are keen to feed into the Review announced today. With austerity set to continue, the role of the private sector will only grow and we should be looking at the potential for greater local Business Rate retention to drive further economic growth. “On broadband, warm words from the Chancellor are a good start, but we look forward to seeing the detail on how digital connectivity in central London will be improved to ensure business growth is not hindered.”

R&D TAX RELIEF

London-based Alma Consulting Group (Alma CG) commented upon the confirmation that, although not specifically referred to in today’s Budget Statement, the measures identified and announced in the 2014 Autumn Statement to increase the SME R&D tax relief rate from 225% to 230% and the R&D Expenditure Credit rate from 10% to 11% will take effect from 1st April 2015. This also includes restrictions on consumables costs and confirmation of the introduction of a voluntary advanced assurance scheme for small businesses.

In a statement, the company said: “This news serves to reduce the uncertainty for businesses who are still getting to grips with major changes made in this area in 2013. Alma CG will be working to help our clients understand the implications of these changes and how they can understand their eligibility and maximise their R&D tax relief from 1st April.”

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This was posted in Bdaily's Members' News section by Ellen Forster .