Despite some welcome news for retailers, KBB industry chiefs have found more to criticise than praise in Chancellor Jeremy Hunt’s Autumn Statement.
Of most interest to retailers in the Budget, however, was the good news on business rates, with the scrapping of the downwards phasing of transitional reliefs.
From April 1, 2023, rateable values on non-domestic properties in England will be updated to reflect the property market at April 1, 2021. A set of reliefs, including a freezing of business rates multipliers and percentage caps on annual increases in business rates will be introduced to mitigate the effect of new valuations on ratepayers subject to substantial increases in bills.
Richard Hibbert, national chair at KBB retailers association the KBSA, said: “There was little good news in this Budget for our members and KBB retailers across the board. The measures announced are designed to redress the problems and debts that have accumulated in the past, rather than support the economy going forward. It is very frustrating to see that the small business sector will pay a high price, while many big businesses will be less affected.
He added: “The only positive for small business on business rate changes is overshowed by other measures such as rising corporation tax, and no clear support for energy bills after April next year. Independent retailers will have to dig deep to adapt and keep their focus on their target market, in order to meet the challenging times ahead.”
Most of the measures put forward in former Chancellor Kwasi Kwarteng’s Growth Plan are being reversed and so corporation tax will increase in April 2023, as originally planned, from 19% to 25%, although the Small Profits Rate will still apply to firms with profits between £25,000 and £250,000.
Small business owners will be hit, however, by the slashing of dividend taxation allowances. These will be cut from £2,000 to £1,000 from April 2023 and to £500 from April 2024.
Commenting on that move, British Institute of KBB Installation (BiKBBI) CEO Damian Walters said: “The decision to cut dividend taxation allowances will be yet another blow for hard-working owners of small limited businesses.”
Also under fire was the Chancellor’s measures on R&D tax reliefs. For expenditure on or after April 1, 2023, R&D Expenditure Credit (RDEC) will increase from 13% to 20% and the SME additional reduction will decrease from 130% to 86%. As accountants BDO put it, this is “yet another blow to SMEs undertaking genuine R&D for whom R&D tax credits represent a valuable source of funding”.
Martin McTague, national chair at the Federation of Small Businesses (FSB) accused the Chancellor of ‘crushing innovation’, saying: “Gutting the Research and Development (R&D) tax credit scheme will crush innovation and growth, resulting in tens of thousands fewer R&D intensive small businesses. This doom loop makes a mockery of plans for growth.”
The autumn statement also said that “the Government is taking steps to ensure the education system provides the skills current and future employers need, for example through T-Levels, Higher Technical Qualifications, skills bootcamps and apprenticeships.
Walters at the BiKBBI approved of that pledge, but found several areas of concern. He said: “It was very reassuring to hear reference to the importance of apprenticeships and vocational learning to drive economic growth.”
But Walters said other aspects of the statement were a concern.
“Our members are already facing commercial challenges through inflated operating costs, ludicrous price increases in materials, supply chain struggles, falling revenue, and shrinking availability of affordable finance,” Walters said. “Add to this the rising trend of late payments and being owed money as a result of customers going into administration, it is clear that BiKBBI members, along with thousands of other SMEs, are forecasting turbulent trading conditions for the foreseeable future.
He added: “Measures introduced in the autumn budget could add even further burden to the hard-working businesses owners servicing a vital sector of the home improvements industry”.
At the Bathroom Manufacturers Association, chief executive Tom Reynolds had this to say: “We would have like to have seen the Chancellor provide a more positive narrative in his presentation of the OBR’s figures, and a better picture for the future. The bathroom sector has remained resilient, but with wall-to-wall negativity about the economy we run the risk of a confidence crisis. Measures could have been taken to better incentivise investment in businesses and the housing stock, but that opportunity was missed.”