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Chambers welcome Budget's business rates support but are cautious on tax and NIC changes
BUSINESSES had been advised to expect minimal change, rather than a blockbuster Budget. The Chancellor, Philip Hammond, did not disappoint, say the regionís Chambers of Commerce.
They and their parent body the British Chambers of Commerce have welcomed the short-term support for those firms hardest hit by business rates rises, as well as the Exchequer’s commitments to technical education, digital connectivity, easier R&D tax credits, and a one-year delay to digital tax reporting for the very smallest firms.
However, the Chambers say that hikes to dividend taxes and national insurance for the self-employed will be viewed far less positively.
BCC director general Dr Adam Marshall said: “While businesspeople appreciate a steady hand on the tiller, the government is sending mixed signals by holding investment largely steady at precisely the time that it is exhorting British businesses to double down.
"More needs to be done in the coming months to improve infrastructure, promote international trade, and encourage lagging business investment to ensure the UK is Brexit-ready.”
Paul Griffiths (pictured), chief executive of Milton Keynes and Northamptonshire Chambers, has given his initial reaction to the Chancellor’s announcements.
On Business Rates… “The business communities hardest-hit by this year’s business rates revaluation will breathe a little easier thanks to the Chancellor’s decision to offer a package of transitional reliefs,” said Mr Griffiths.
“We now challenge councils to use every penny of the new funding announced by the Chancellor to offer relief to the hardest-hit businesses in their areas, without excuses and without delay.
“However welcome, measures that mitigate the short-term impact of business rate rises are little more than a sticking plaster.
"The radical changes needed to improve the broken business rates system will have to wait for another day. The campaign for radical reform - and an end to punishing levels of business property tax to ensure the Treasury raises enough to fund local services - continues.”
He is disappointed at the decision not to bring forward the switch in indexation from RPI to CPI, which could cost firms billions – “bills they can ill-afford when taken together with other policy costs like the Apprenticeship Levy, pensions auto-enrolment and higher tax on insurance premiums,” Mr Griffiths said.
“The government had an opportunity to revisit the detail of reform to the appeals system but has not addressed the serious concerns ratepayers have. This will mean that more businesses seeking to correct an erroneous bill could go without redress.
“In the longer-term, fundamental change is needed, including stripping plant and machinery from rates assessments that does so much to discourage business investment.”
On international trade… “There was a noticeable and disappointing absence of any new support for exporters, or measures to encourage international trade in this Budget.
"As we begin the Brexit process, it is more important than ever to get UK businesses trading their goods and services with the world. The government must do more to incentivise and promote companies to be ambitious and trade to new markets.”
On the Making Tax Digital scheme… “The temporary deferral of making tax digital for firms below the VAT threshold is a welcome step. However, while this will help to ease some of the administrative burden for our smallest businesses, there continues to be serious reservations about HMRC’s ability to deliver such a major undertaking.
“HMRC must ensure that the move to digital tax accounts does not create new burdens for businesses, and must work closely with the business community, accountants and other stakeholders on their plans for implementation.”
The Chambers have reacted with caution to the changes to the tax system for the self-employed.
Suren Thiru, BCC head of economics, said: “Many entrepreneurs and sole traders will be disappointed to see significant rises to their National Insurance bills over the coming years.
"Ministers need to ensure that these business people, who make a significant contribution to the economy, also get the recognition and benefits that correspond to their contribution.”
On the reduction of the dividend allowance, Mr Thiru said: “While the reduction is relatively small, this will come as a blow to many small business owners. Alongside changes to the tax system for the self-employed, the government risks undermining the UK’s entrepreneurial spirit.”
The Chambers have welcomed the Chancellor’s plans for investment in technical skills as “an important step in the right direction”.
Ensuring that businesses of all sizes, and in all regions, have an input into the design of the new system will be crucial and business, educational institutions and government need to work together to ensure that parity of esteem between academic and technical education is achieved.
The Chambers say that reducing the cost of accessing the tax credit will encourage investment in research & development which should boost the UK economy at a time when productivity growth remains weak.
However, to ensure that UK firms remain competitive on the global stage it is vital that greater investment in research and development is supported by retention of our intellectual property.
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