Chancellor John Healey has announced a major change to business taxes in the Budget, raising the threshold at which small companies start paying rates from £12,000 to £18,000. The move is expected to benefit high street businesses across the UK.
Support for Small Breweries and High Street Overhaul Calls
Mr Healey also announced support for small breweries. The announcement follows comments from George Greenaway, 58, owner of the UK's best pub, who told the Express that there needs to be a "complete overhaul of an unfair rates system" so that square footage does not play a part.
The director said: "I think you've got to you've got to remove the old sort of, 'Oh, it's a shop, you've got to pay so much per square foot.' I think there's got to be a complete overhaul of it, and we've got to try and work with the Valuation Office to try and save the high street."
Bank Tax Rise and Reactions
Mr Healey is also expected to announce a rise in the surcharge on bank profits from 3% to 8%, reversing a tax cut for the sector launched by former Conservative Chancellor Jeremy Hunt. The Trades Union Congress (TUC) has voiced its support for the move, suggesting the increase on "bumper profits" of banks would raise £2.25billion a year for the Treasury.
However, City bosses claim the move would stifle investment in Britain. Trade body UK Finance warned "further increases in bank taxes would weaken competitiveness" and "discourage investment and job creation". This comes after Mr Healey described banks as part of "the crown jewels" of the British economy.
Fiscal Rules and Headroom Forecasts
The Budget emphasised "breathing room" for households and businesses. The Government is expected to increase taxes in the face of stretched public finances due to increased borrowing costs. Mr Healey is also sticking to his predecessor, Rachel Reeves's fiscal rules, meaning day-to-day spending needs to be financed by taxes rather than borrowing by 2029/30, and that public debt as a share of the economy should fall in the same year.
In March, the UK's fiscal headroom was forecast by the Office for Budget Responsibility (OBR) to be around £24billion. The Resolution Foundation estimated that could have halved to £12billion, while the Institute for Fiscal Studies (IFS) thought it could still be around £20billion.
Energy Bills and Other Allocations
This morning, it was announced that standing charges — a fixed daily fee that covers the costs of connecting households to gas and electricity supplies in Great Britain — would be scrapped. At the moment, the average fee for gas is just under 30p a day, equivalent to around £108 a year. Under the current energy price cap, the dual energy bill for a typical household is currently £1,723 a year.
Cornwall Insight has suggested the cap could increase 16% on January 1. The Chancellor previously rejected the possibility of hiking capital gains tax, the levy on profits from selling assets, despite calls from within Labour to make the rate closer to that on earnings.
An initial £285million has been allocated as part of a plan to give mayors and regional leaders in England more money and power to invest in projects in their areas. In addition, it is expected that more than £1billion will be allocated for social and affordable housing, and a further £432million will be committed to the rough sleeping programme to get people off the streets in England.
