Chancellor of the Exchequer Jeremy Hunt announced on Thursday in his budget speech that the UK government will take several steps to help business rate payers — a package worth £13.6 billion over the next five years.
"Nearly two-thirds of properties will not pay a penny more next year, and thousands of pubs, restaurants, and small high street shops will benefit," Hunt said to MPs in the UK Parliament's House of Commons.
The package includes:
- Freezing the business rates multiplier for another year to protect businesses from rising inflation;
- An extended and increased relief for retail, hospitality, and leisure businesses;
- Reforming Transitional Relief for businesses; and
- Protection for small businesses that lose eligibility for either Small Business or Rural Rate Relief due to new property valuations through a more generous Supporting Small Business scheme.
Andrew Harding, FCMA, CGMA, chief executive–Management Accounting at AICPA & CIMA, together as the Association of International Certified Professional Accountants, said: "CIMA members work in businesses across the country, and our research shows that they want certainty and stability regarding tax and regulation over the next few years. If the government can provide a stable framework, the commercial sector can begin to take the medium-term investment decisions that will generate the growth we need."
Hunt said the government's priorities are stability, growth, and public services, and "high inflation is the enemy of stability".
To help combat the country's 11.1% inflation, Hunt announced £26 billion of support for the cost of living, including continued energy support, as well as 10.1% rises to benefits and the State Pension and an increase in the National Living Wage.
Taxes will increase by about £25 billion, including an increase in the Energy Profits Levy and a new tax on the profits of electricity generators.
Government programmes will be cut by about £30 billion, while NHS and Social Care get access to £8 billion, and schools will receive an additional £2.3 billion.
Harding said: "Tackling and mitigating inflation is the most pressing economic challenge facing the whole country. That inflation is being driven by the legacy of a pandemic shock to supply chains and by rising energy and fuel costs."
More high-earning individuals will now be taxed at a rate of 45%. Previously, that rate was reserved for those earning £150,000 or more. Now, those earning above £125,140 will pay the 45% rate.
Income Tax, Inheritance Tax, and National Insurance thresholds will be frozen for an additional two years until April 2028.
Hunt said he still had concerns that not all school leavers receive the skills they need for today's economy: "I want to know the answer to one simple question: Will every young person leave the education system with the skills they would get in Japan, Germany, or Switzerland?"
He has appointed Sir Michael Barber to advise him and his education secretary on the implementation of the skills reforms programme.
Harding said: "We welcome the commitments made to upskilling the workforce, including rolling out the Lifelong Learning Entitlement from 2025. If it is extended to a range of learning providers, this programme could make a significant impact, giving people the skills they need to succeed in the modern business environment."
Harding outlined AICPA & CIMA recommendations to "help businesses reduce labour and skills shortages and encourage investment", including:
- Support for retired workers to re-join the labour force;
- Reform the welfare system to include special arrangements for time limited work to help those on welfare take on temporary work to cover short-term labour and skills gaps;
- Reform childcare to help parents re-enter the workplace;
- Introduce a Rebuttable Right to Retrain to encourage employees to raise training issues with their employer more easily and create a bias towards increasing training and skills development;
- Introduce Mandatory Time Off for Training. Employees would be given the right to a specified period of time for training. The timing and duration of the training would need to be agreed with the employer, and the government could give companies tax advantages for providing this; and
- Reform the Apprenticeship Levy so it becomes an Apprenticeships and Skills Levy. Widening the range of upskilling the levy supports will increase workforce productivity and thus drive prosperity.
— To comment on this article or to suggest an idea for another article, contact Kevin Brewer at Kevin.Brewer@aicpa-cima.com.