Responding to the Chancellor’s Budget statement, Alan Lowry, Policy Chair of the Federation of Small Businesses in Northern Ireland said:
“This budget was delivered in difficult circumstances, so we were not surprised that it set out a range of major tax increases, the vast majority of which will fall on businesses. The increase in the employer National Insurance contributions will hit many, but we were pleased that the Chancellor has taken on board the concerns that FSB has been repeatedly raising and that she simultaneously chose to increase the employment allowance for small businesses. The uplift in this allowance is very welcome, as it more than doubles from £5,000 to £10,500, which will shield the smallest employers from the jobs tax and is therefore a pro-jobs prioritisation in a tough Budget.
“As in previous years, the Chancellor has seen fit to protect small businesses in England from an inflationary hike in business rates – by freezing the small business multiplier and extending business rates relief for small firms in retail, hospitality and leisure. Regrettably, the Stormont Executive has consistently failed to pass on this assistance to businesses in Northern Ireland, despite having received the funds from Westminster, so we renew our call on Executive Ministers to respond positively this time round.
“Other changes, such as the tax treatment of agricultural land and other business assets, are causing concern to business owners here, as are punitive changes to the tax levels on Business Asset Disposal Relief, which has historically been a real incentive to entrepreneurs to continue to invest in their businesses throughout their working life. Building a business involves a significant element of risk, along with personal and financial investment. For the economy to grow, we need more people to be incentivised to take that leap and, in turn, to create jobs, opportunities and prosperity in all communities across the country. We lobbied hard for Entrepreneurs’ relief (now branded Business Asset Disposal Relief) to be retained up to £1million, and are pleased that Government has responded positively, however the level of relief will gradually reduce over time which, when combined with the increase in tax on the remainder - from 10% to 18% - will result in substantially more tax being paid on business sales in the future.
“Against these new taxes, the true test of today’s Budget will be whether small businesses can grow and end the economic stagnation in which the UK has been stuck. Many SMEs will struggle with the rises in employer national insurance on top of the substantial increases in the National Minimum Wage and the large cost implications from proposed employment law reforms. We’ve been very clear in our warning of the difficulty with which businesses will be confronted in meeting all of these changes in short order, with potentially negative impacts on jobs, wages and prices.
“The Budget documents include plans for a small business strategy Command Paper, which is a welcome signal that ministers appreciate the central role that small businesses play in driving growth, so we look forward to working closely with the Government on this issue. Investment in infrastructure is also key to future growth, so we welcome the confirmation that the previously announced Growth Deals are to be resumed, despite the uncertainty into which they were thrust by an unexpected suspension of policy last month. We are also relieved at the decision not to raise fuel duty.
“Against a challenging backdrop, today’s Budget will take time to digest but it seems to show a direction in business policy for the whole of this Parliament where support will be aimed at smaller businesses rather than big corporates, but where the significant amount of revenue that the Government wants to raise will come directly from business.”