Measures introduced by the government in the ‘Mini-Budget’ have been mostly welcomed by the retail industry.
Detailed by Chancellor Kwasi Kwarteng, the measures included a reversal of the recent rise in National Insurance tax for both employees and employers, corporation tax to be frozen at 19% and 40 new Investment Zones, providing targeted tax reliefs for new businesses.
The basic rate of income tax has also been cut to 19% and the 45% top rate of tax for higher earners abolished (not in Scotland) while beer, cider, wine and spirit duties will be frozen at their current levels from February 2023
This comes after measures to reduce energy bills for businesses for the next six months were announced by government.
Association of Convenience Stores (ACS) chief executive James Lowman broadly welcomed the mini-Budget’s points but urged more long-term action.
“We welcome that the government’s plan aims to stimulate growth and incentivise investment by businesses. In the last 12 months local shops have invested £605million in improving services, making their businesses more sustainable, and creating secure local jobs.
“The biggest issue facing local shops in recent months has been the cost of energy. The support being provided in the coming six months will act as a lifeline for thousands of businesses, but the Government must continue to support local shops in 2023, especially the most vulnerable facing difficult decisions in the Spring.”
The Federation of Wholesale Distributors (FWD) also welcomed the measures, particularly on energy and alcohol duty.
“The recent escalations in the cost of doing business, food price inflation and the pervasive impact of the energy crisis needed to be addressed and several important measures have been introduced today.
“We welcome the package of support for businesses. We hope the Chancellor will also be able to provide certainty for the longer term, and acknowledge the impact price rises are having on energy intensive sectors such as food and drink wholesale. Policy solutions including business rates reliefs for affected sectors must include the likes of food and drink wholesale.”
Supply chain
Another measure introduced by the Chancellor was to revisit IR35 rules which changed how businesses work with contractors from a taxation point of view. The FWD added that the IR35 reforms introduced in 2017 and 2021 played a part in the driver shortage of last year. “We welcome steps by the Government to revisit IR35 rule changes. The reforms of 2021 contributed to the HGV driver shortage which plagued the wholesale sector. We are keen for the Government to find a solution which supports self-employed workers and protects our vital supply chains.”
Business rates
Helen Dickinson, chief executive of the British Retail Consortium, criticised the government for not acting on business rates. “Retailers are facing immense cost pressures, not just from energy bills, but also a weak pound, rising commodity prices, high transport costs, a tight labour market and the cumulative burden of government-imposed costs,” she said. “Yet what was missing from today’s announcement, was any mention of business rates, which are set to jump by 10% next April, inflicting another £800m in unaffordable tax rises on already squeezed retailers. It is inevitable that such additional taxes will ultimately be passed through to families in the form of higher prices.
“There is still time for the government to act. Freezing the business rates multiplier will stimulate investment and will allow retailers to focus on what’s important - keeping prices down for households.”
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