We’ve had plenty of time to digest the content of George Osborne’s latest Budget announcement. While the media and political reaction to the budget has been mixed (to say the least), and most of the attention focused on the new sugar tax and further cuts to the welfare budget, there was plenty in the announcement for builders’ merchants and retailers to be pleased about.
Today, we take a brief look at the most significant announcements in the budget documents and how they might impact builders’ merchants and other SME retailers.
Arguably one of the most popular and surprising announcements in the budget was the drastic change to business rates. Business rates relief is set to be permanently doubled, with thresholds for rate relief rising. Businesses with properties with a rateable value of £12,000 or below won’t have to pay business rates at all (an estimated 600,000 businesses), whilst those with rateable values of between £12-15,000 will benefit from tapered relief (50,000 businesses).
In addition, the threshold for the standard rate multiplier will rise, meaning that a quarter of a million businesses will fall under the small business multiplier bracket for the first time, meaning a lower bill for business rates.
Although these changes don’t represent a fundamental rethink of the tax, they will be still be welcomed by high street retailers and other SMEs.
The Builders’ Merchants Federation took these changes as positive news, but remained concerned that firms are still immediately penalised for investing in plant and machinery – these investments are taken into account in a property’s rateable value.
Other tax cuts and freezes
The good news for businesses didn’t stop there. The Budget announcement brought news that corporation tax would be reduced to 17% by 2020 – we had previously expected it to fall to 18%. Also, the self-employed will be exempt from paying Class 2 National Insurance Contributions, saving them £2.80 per week.
Fuel duty was frozen for another year, in a move which surprised many commentators, as it was suspected that the chancellor would have little choice but to tap this source of revenue.
A boost for the ‘Northern Powerhouse’
The government’s Northern Powerhouse plans have been criticised in recent months, but the budget saw £300 million more set aside for improving transport in the north of England, including seed funding for HS3 (Leeds to Manchester) and plans for a Trans-Pennine tunnel under the Peak District.
£700 million extra funding for flood defences in Leeds, Cumbria, the Calder Valley and York was also announced, with additional funds in place to help repair infrastructure damaged during the winter storms.
Retailers in the north of England will no doubt welcome this new investment, although timescales remain in flux – and if costs spiral, it’s unclear if the government will have the funds to continue supporting these projects.
Overall, the Budget was less positive than last year’s autumn statement, but there’s still plenty of good news in the announcement for SME retailers.
We’ll continue to keep you up-to-date with the latest retail news on the Trader blog – and there’s plenty of analysis, tips and ideas for retailers and builders’ merchants, too.
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