With the next budget due on the 3 March, business owners across the UK will be waiting with bated breath, to hear what Chancellor Rishi Sunak will deliver to support business recovery as we look towards the end of Covid-19 restrictions and life returning to “normal”.
What we all know is that the Governments herculean efforts to tackle Coronavirus and support those affected by the restrictions have left a huge financial hole that needs to be filled. Latest estimates suggest the pandemic support measures have cost the UK £270 billion and this budget will see the Chancellor not only outline the first steps to how we begin balancing the books but also what measures the Government intends to put in place to support businesses as they begin the long road to recovery.
As a funder, we have worked alongside our clients throughout this pandemic and as a business owner myself, I can empathise with the uncertainty the last 12 months have brought. With a looming cliff edge for the support measures in place rapidly coming towards us, we need good news stories to inspire confidence and provide reassurance that Government support will continue to support economic growth not a budget focussed on tax increases to fill the coffers.
So, this is my view on what the Chancellor needs to include in his Budget to best protect UK Business and give us a fighting chance to get the economy back up and running as quickly as possible.
- Extend the furlough scheme until at least the end of June if not the end of the year – it provides the breathing space for firms to recover income and supports the retention of jobs until the economy is fully open again. It also supports consumer spending which will help our economies recover quicker.
- Continue the business rates holiday for retail, hospitality and leisure businesses – consider it a lifeline to support businesses and an investment in our local high streets and communities.
- Introduce the much-mooted online sales tax - Our online ‘friends’ during the pandemic have done extremely well but its time now to level the playing field and give businesses and our high street the boost it needs by introducing this much mooted online sales tax.
- Save tax hikes for April 2022 – Any tax increase will not be well received and will just add to the burden that the business sector is carrying. The reality is that some taxes can target those who have done well throughout the pandemic:
- The inevitability of Corporation Tax hikes is understood but consider segmenting it, so the more successful companies have higher rates protecting those smaller perhaps more vulnerable businesses.
- Freeze tax allowances at their current rates
- Adjust pension tax relief to 25% for higher rate taxpayers
- Increase NIC rates for higher earners
- Maintain the 5% VAT level for tourism and hospitality to support their recovery and freeze or consider reducing their employers NI contributions
- Extend the Stamp Duty holiday – it has proved successful in boosting the housing market. Giving confidence to new home buyers has a knock-on effect on the construction and related sectors
- Increase CGT as a last measure – it won’t be popular as it reduces the incentive for entrepreneurs to invest and build businesses. In an era where innovation is key, we need to be supporting entrepreneurs for the good of all.
The Chancellor needs to do everything in his power to not negatively impact an already reeling business sector. He will need to rely on his innovative skills to help get the UK economy back firing once more, but we as business owners who have benefitted from the support, they so generously provided must accept the part we now need to play in reducing that debt.