Gus Williams, interim CEO at Chambers Wales South East, South West and Mid, said:

“This was always going to be a difficult budget. The headlines are going to be the £40bn increase in taxes which was inevitable given pressures caused by demographics – an ageing population – increasing numbers of people not participating in the workforce, and the need for long term public investment.

“The approach has been to try and spread the additional tax burden as widely as possible without touching income tax or VAT, focusing on those taxes that provide most certainty that the rises will increase the tax take in the short term. This means changes to Employers NI, inheritance tax, agricultural and business disposal relief, Capital Gains Tax, second home stamp duty, abolition of the non-dom regime, air passenger duty, tax on vapes, VAT on private schools.

“Changes to Employer NI, just increasing the rate to 15% and reducing the threshold from £9,000 to £5,000 rather than including pension contributions means a slightly lower rise in Employers NI than had been flagged, and makes sense as it retains the pension contribution incentive. But it will be a burden to businesses, particularly in some sectors where wages are at the lower end and where staffing costs are a high proportion of overall costs.

“The increase in the National Minimum Wage and increases to Employers NI will undoubtedly squeeze small business margins, and small business will want to see evidence of government investment, and other initiatives that grow the economy and increase opportunities to counter this squeeze on margins – or the cost pressure on small business could have consequences on hiring and investment.

 

“Some will be upset about the increases in Capital Gains, but it is worth noting that the rises in CGT broadly take us back to where they used to be, there are various exemptions and rules which we will need to look into before providing a full assessment.

“Freezes on small business rates and reductions for the hospitality and leisure sectors are something the Chambers of Commerce lobbied hard for, and are welcome.  The infrastructure investment plans appear sensible, well thought out and achievable rather than just aspirational.  The reduction in draft alcohol duty is welcome news for pubs.

“Changes to inheritance tax for agricultural and business property will impact succession and tax planning for a number of small business owners, and it is important that all small business owners make sure they have a succession or exit plan in place.

“The slight of hand in all this is that a lot was made of personal allowances increasing in 2028 – it’s currently 2024.  The ongoing freeze in personal allowances until 2028 combined with the national minimum wage increases will push more tax revenues into the Treasury, and this is probably where a significant chunk of the additional tax take will over the course of this parliament will actually come from.

“The real test will be whether the government can deliver efficiently on its investment plans, makes the right decisions on capital spending, can deliver genuine reform to the planning system, and can tackle the impact of those not working and particularly not working due to long term sickness.”