The Chancellor’s decision to increase the VAT threshold from £85,000 to £90,000 in his Spring Budget has been hailed as “very welcome” for small businesses.
Staffordshire Chambers of Commerce said that while much of the budget seemed “cautious”, this announcement was a big step in the right direction.
As reported in Daily Focus, the Chamber had written to Jeremy Hunt last week calling for the increase, citing research which showed businesses with turnover less than £85,000 were concerned about growing revenue beyond this.
And Mr Hunt duly obliged when he rose to his feet in the House of Commons and raised the threshold by £5,000 as part of a series of business investment and support measures.
The Chamber also welcomed the Chancellor’s plan to extend permanent full expensing to leased assets. This is a tax break which allows companies to deduct the full cost of investing in machinery and equipment from their tax bill.
There was also optimism that a freeze in alcohol duty and the extension of a 5p cut in fuel duty would benefit the hospitality and transport sectors respectively, while commuters would benefit from the latter too.
However, other changes called for by the Chamber in its letter weren’t addressed – such as major reforms to the creaking planning system, upgrading of the national grid and the further roll out of electric vehicle charging infrastructure.
Business leaders at the Chamber said they would continue to lobby on these and other issues that local businesses saw as priorities, such as greater clarity and financial agreements on key transport schemes and more flexibility around the Apprenticeship Levy to allow for expanded training and upskilling.
Chamber Policy Adviser Declan Riddell, pictured above, said: “I don’t think there were any real shocks in what the Chancellor said. It was a fairly cautious budget across the piece but there are some positives we can take from it.
“In the letter we sent to Jeremy Hunt we asked for the VAT threshold to be increased and that has happened. So, for us that is something we are pleased about.
“It really does help small business as the administrative burden often sits disproportionately heavily on them because they don’t have the financial and operational resources at their disposal to deal with the paperwork required. So, this increase is very welcome news.”
Declan added that there was also some potentially brighter news on the drive to fill employment gaps in badly affected sectors.
He said: “We have been calling for more support in filling the gaps in tight labour market sectors like health and hospitality.
“The Chancellor spoke about more measures to incentivise people back into work – such as the whole generation who retired earlier following the Covid pandemic. Anything that can be done in this area is positive from our point of view.”
The Chancellor also claimed that his latest 2 per cent reduction in National Insurance would bring 200,000 people back to work – filling one in five gaps in the labour market.
Declan added: ‘“Again, we would certainly welcome that because we know businesses are reporting they are struggling to recruit.
“Of course, the devil is in the detail but it would be good to see this announcement having an impact on the economy and recruitment.”
Read Staffordshire finance expert Chris Alderman’s take on the budget here.
And for a round up of reaction from national business organisations, click here.
