ICSM Credit gives a cautious welcome to the budget

Good news on business rates but worries over the coronavirus effect on business

ICSM Credit has given a cautious welcome to the contents of Chancellor Rishi Sunak’s first budget in the House of Commons with some concerns over the effects of the corona virus crisis.

Ian Carrotte of ICSM Credit said the economy had begun to get back to normal in the New Year but the outbreak of the coronavirus had thrown it into reverse gear.

He said: “We welcome the chancellor’s plans to combat the disease with help for the NHS and the £500m hardship fund to help vulnerable people. Firms with fewer than 250 staff will be refunded for sick pay payments for two weeks which is welcome as they make up the bulk of commerce. Small firms hit by the outbreak can technically apply for the ‘business interruption’ loans which is good and we are particularly pleased that business rates in England will be abolished for firms in the retail, leisure and hospitality sectors with a rateable value below £51,000.”

Chancellor Rishi Sunak announced that the National Insurance Contributions tax threshold was to rise from £8,632 to £9,500 saving employees just over £100 a year and for women VAT has been scrapped on sanitary products although these changes are not immediate.

“All businesses will be delighted by the freeze on fuel duty,” commented Ian Carrotte, “as it is a tax on business whether it is a courier company, an international haulage firm or simply the salesman in his car visiting customers. And the hospitality industry will be relieved over the freeze on booze as we need to boost trade in pubs and restaurants with lower taxes to encourage people to go out and socialise and spend.”

He said the elephant in the room was what sort of deal would be agreed on Brexit as there was concern the coronavirus crisis could affect negotiations but he welcomed the news that the system of business rates was to be reviewed later this year.

“Business rates have been a brake on business for years,” he said, “they are often unfair and penalise small firms and high street shops when giants like Amazon seem to pay proportionately much less.”

The chancellor also said the entrepreneurs' relief will be retained, but lifetime allowance will be reduced from £10m to £1m and there would be £5bn spent on getting gigabit-capable broadband to rural places.

Other points were an investment by the Government of £900m for research into nuclear fusion, space and electric vehicles while VAT on digital publications, including newspapers, books and academic journals to be scrapped from December.

ICSM Credit has many members in the printing and packaging industries which will be facing a new plastic packaing tax which will come into force from April 2022. Several of the major paper suppliers to the print industry are members and they will no doubt be relieved that paper and card which are entirely recyclable will become back in vogue for a variety of packaging products due to the potential cost differential. Manufacturers and importers whose products have less than 30% recyclable material will be charged £200 per tonne.

More than £600bn is set to be spent on roads, rail, broadband and housing by the middle of 2025 which will help businesses in general – assuming it all goes ahead. Ian Carrotte said there was a note of caution on all the promises of infrastructure as the economy was only set to grow by 1% this year which did not take into account the impact of coronavirus.

He said: “This is the slowest growth since 2009 and the Credit Crunch so all I can say is I hope the sunny weather of spring and summer will arrive early to kill off the virus so business can do what it does best and that’s to do business.”

ICSM Credit

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