Staffordshire businesses across a range of sectors responding to yesterday’s budget described a mixed bag of bad and good news, plus a few surprises thrown into the mix.
Liam Nicholson, Associate Director at RSM UK, Tax based on Festival Park, offered the following post-budget reaction:
“My initial response to the budget is that there are some big measures and some surprising ones. They said they would target the wealthy and bigger businesses and that’s what has happened overall.
“As expected, employers’ National Insurance contributions will go up to 15% from April 2025. This will be a big cost for businesses, with some carve out for the very smallest businesses.
“However, I wasn’t expecting to see an end to the freeze on income tax thresholds, which is good news for workers, albeit the freeze will continue to run until 2028-29 after which thresholds will rise in line with inflation.
“Capital gains tax rates have gone up, but probably not by as much as people were fearing. They have kept business asset disposal relief, which some predicted would be axed, although it will be less valuable going forward.
“One of the biggest announcements was that pensions will be brought into inheritance tax from 2027. This removes one of the significant advantages in building large pension pots to be left for the next generation, and may well change behaviours in respect of individuals accessing their pension funds before death.
“They have also limited business relief and agricultural relief – which previously provided 100 per cent relief from inheritance tax for qualifying assets. From April 2026 only the first £1million of value will benefit from 100% inheritance tax relief, with relief restricted to 50 per cent on any value above £1m.
“This will be a significant cost to the estates of deceased owners of large businesses, and will leave many concerned as to how they will fund the payment, for example will businesses need to be sold to generate the cash to pay the bill?
“People should consider what their succession plans are for their businesses, and whether lifetime gifts may be appropriate where plans are to pass the business to the next generation.
“As the changes won’t come in until April 2026 there is some time to plan now, but anyone with substantial value tied up in their businesses should speak to their tax advisor to ensure they fully understand the implications and potential planning opportunities.”
In the manufacturing sector, Nick Lathe, Finance Director of Hickson-based Mec Com Fabrications, a precision fabricator and specialist in electromechanical assembly, said: “It was a very difficult conundrum to navigate, and it appears that businesses are picking up the majority of the tax burden.
“The increase in national minimum wage has the potential to squeeze other pay levels within companies and that – when combined with the employer NI contributions – will ramp up costs and put additional pressure on bottom lines throughout the country.
“There is little scope for manufacturers to pass these on, so it will be a case again of looking how we work smarter and if we go through with planned investment and recruitment.
“With my glass half full, I’m hoping that the impact of these tax rises will hopefully be partly offset by the market reacting positively to the delivery of a fully costed and balanced budget.
“This in conjunction with current lower rate of inflation, should provide the opportunity for further imminent interest rate cuts and a little bit of relief to SMEs keen to grow but continually squeezed by external pressures.”
Jonathan Bellamy, chairman of Stoke-on-Trent city centre BID said: “The budget provided a very interesting mix of proposals affecting businesses in the city centre. Workers on minimum wage will be thrilled at a rise of 6.7%. However many businesses will be stressing at the additional costs to them of such a rise alongside other rises that will hit them:
“The big headline of course is employers national insurance contributions rising from 13.8% to 15% alongside the contributions starting threshold being reduced back to just £5,000. Those getting a let off in this will be the smallest businesses however, those with about 4 or 5 employees, of which there will be a number in the city centre. For these, the news that the amount employers can claim back on their NI bill will rise from £5k to £10.5k means they effectively won’t be paying any NI for their first four workers.
“The second big headline is on business rates with the current 75% discount being replaced by a 40% discount for the coming year for the retail, hospitality and leisure industry. Whilst a 40% discount is better than nothing it still means that businesses will see their rates virtually double next year, a significant cost for many.
“Probably just as interesting however is the proposed introduction in 2026/27 of two permanently lower tax rates for retail, hospitality and leisure properties, whilst other ‘more valuable properties’ will pay higher multiples. We don’t have enough details of this yet to know its impact in real terms and whether it will indeed be a ‘help to the high street’.
“So in summary, certainly the predominant sectors within a city centre of retail, hospitality and leisure will feel some support, but only in contrast to others less fortunate. In reality, the smallest businesses and those in retail, hospitality and leisure will come out of this budget the least scathed, but everyone is being hit.”
