The Chancellor of the Exchequer, Rishi Sunak, has presented his Budget for the year ahead – here are some responses from our West London members and partners.
National insurance, tax and Entrepreneurs’ Relief
The government has pledged to ensure that the UK “continues to be attractive to investment and remains a dynamic environment to start and grow a business”. It has therefore increased National Insurance Contribution Employment Allowance to £4,000. Corporation Tax has been maintained at 19%, the lowest in the G7 and G20. The government is also reforming the Entrepreneurs’ Relief and increasing tax incentives for businesses investing in structures and buildings, and Research and Development.
- Bright Grahame Murray: “Mr Sunak had the benefit of seeing what happened since that date and clearly decided that the medicine required was a large dose of tonic, rather than tax. He announced a total package of fresh spending for 2020/21 of £30 billion, of which £12 billion was directly attributed to countering the impact of coronavirus on the UK economy and NHS finances.”
- Moore Kingston Smith: “From a tax point of view, with the exception of business owners hoping to qualify for entrepreneurs’ relief, there are not likely to be many significant losers. It was widely expected that entreprene urs’ relief would be significantly curtailed or even abolished. While the lifetime allowance has been reduced to £1 million, many entrepreneurs will still be able to benefit from this in the future. Changes to the pensions regime and increases in various reliefs for businesses that invest in R&D and commercial buildings were also announced.”
Support for business in the light of Coronavirus
The budget included a range of stimulus measures to assist businesses in the light of the Coronavirus. One such measure was to increase the Business Rates discount for businesses in the retail, hospitality and leisure sectors with a Rateable Value (RV) of £51,000 and under to 100% for one year. Meanwhile, it introduced a new pubs discount to take £5,000 off the business rates bills of pubs with an RV below £100,000.
- Professor Chris Turner, CEO of British BIDs: “This is, indeed, good news and will offer some, mainly smaller, businesses with much needed relief at a difficult time. However, it does not tackle the much wider reform that is needed and does not assist larger retail chains that are carrying the majority of the burden. It must, therefore, remain a welcome short-term measure to help boost the economy, rather than a trial for any longer-term solution.”
Housing and infrastructure
The budget pledged a £10.9 billion increase in housing investment to support the commitment to build at least 1 million new homes by the end of the Parliament, and an average of 300,000 homes a year by the mid-2020s.
One measure to tackle lack of affordable housing includes introducing a 2% Stamp Duty Land Tax surcharge on non-UK residents purchasing residential property in England and Northern Ireland from 1 April 2021. This is an effort to help to control house price inflation and to support UK residents to get onto and move up the housing ladder. The money raised from the surcharge will be used to help address rough sleeping.
It also committed to “the largest ever investment in English strategic roads,” with over £27 billion between 2020 and 2025, enough funding to fill in around 50 million potholes across the country, and unprecedented investment in urban transport, with £4.2 billion for five-year, integrated transport settlements for eight city regions on top of £1 billion allocated to shovel-ready transport schemes.
Mobile coverage in rural areas is to be “radically improved”, with a record £5 billion investment in gigabit broadband rollout in the hardest-to-reach areas of England, Scotland, Wales and Northern Ireland.
- Moore Kingston Smith: “The Budget was a bit of a mixed bag for those in the Real Estate & Construction sector – the significant commitments made to housing and infrastructure spend should be good news for those in construction and development, but the detail is yet to be shared.”
- Tom Bill, Head of London Residential Research at Knight Frank: “The introduction of a surcharge for overseas buyers will bring the UK into line with many other global property markets. Attempts to ease affordability pressures in the wider housing market should be welcomed, although the new measure will need to be monitored carefully to ensure there are no unintended consequences, including for the forward-funding of new-build developments. Furthermore, a wider re-think of stamp duty rates is still needed to increase housing market liquidity and maximise any stimulus the government plans to provide to the UK economy.”
- Parmjit Dhanda, Executive Director, Back Heathrow: “The Chancellor delivered his budget to Parliament today and talked about the need for economic growth. But if he is to deliver on his plan to control public borrowing and deliver economic growth, he needs to get on and build the new runway at Heathrow Airport. Plans for a new runway have been kicking around in Parliament for 17 years now. If the Chancellor is serious about delivering jobs and economic growth, it’s high time he coined his own phrase to finally ‘Get Heathrow Done’.”
Moving towards a greener economy
The Budget announced a Carbon Capture and Storage (CCS) Infrastructure Fund to establish CCS in at least two UK sites, one by the mid-2020s, a second by 2030. To encourage more environmentally-friendly ways of heating homes and other buildings, the government will also introduce a Green Gas Levy to help fund the use of greener fuels, increase the Climate Change Levy that businesses pay on gas, and reopen and extend the Climate Change Agreement scheme by two years.
To support drivers to move away from polluting vehicles, the Budget announced investment in electric vehicle charging infrastructure, which will ensure that drivers are never more than 30 miles from a rapid charging station, providing £532 million for consumer incentives for ultra-low emission vehicles, and reducing taxes on zero emission vehicles.
Using red diesel will be prohibited except for in agriculture, fish farming, rail and non-commercial heating. The government will tackle air pollution by providing £304 million to help local authorities reduce nitrogen dioxide emissions and improve air quality.
- David Goatman, Partner, Head of Energy and Sustainability EMEA at Knight Frank: “The Chancellor has today announced a new £500m investment in rapid EV chargers, so that drivers should be no further than 30 minutes away from a charger. This new investment is welcome. However, the bigger question is whether we have the grid infrastructure to accommodate the EV revolution we need? The challenge ahead for the grid as our vehicles move from fossil fuel to electrification is huge and affects not only cars, but the vans, trucks, and fleets that serve our e-commerce economy. £500m is the tip of the iceberg.”