THE WORD AT WESTMINSTER
WHAT’S UP AT WESTMINSTER?
The long-awaited Budget finally arrived at the end of October. FMB’s Head of Policy and Public Affairs, Jeremy Gray, explains what it means for you
No fuel tax increases Despite speculation of a rise in fuel duty, which could have damaged bottom lines with the industry’s reliance on vans, prices at the pumps will not go up due to tax increases. Capital Gains Tax Capital Gains Tax from selling shares has increased to 18 per cent from 10 per cent. While this may not be immediately obvious as a problem, those looking to sell their companies when approaching retirement may be affected, as they will receive less money when selling their business and assets. Loans for small house builders The government has committed to upgrading energy-inefficient homes with a £3.4 billion pledge. While plans for how this will affect owner-occupiers are not yet clear, this should provide a pipeline of work for builders. The government also announced housing guarantee schemes, which could take the form of low-cost loans for SME housebuilders. It’s a positive step forward, but many issues remain. The conclusion Despite feeling stung in a few places, some builders could be shielded by an increased Employment Allowance and may not notice the rise in NI contributions. It’s positive to see money released for retrofitting homes, as this could lead to a significant pipeline of work for builders. Does this Budget drive the industry forward? No, but we didn’t expect it to. There were whispers that the new government’s early years would bring difficult budgets, with the hope that fiscal shackles would later loosen. We’ll have to wait and see on that one.
M any governments aim to resolve finances early on, but the Labour party held out – leaving a vacuum to be filled by speculation that was rather downbeat about the nation’s finances. Is it all doom and gloom or is there a silver lining? It’s not immediately clear. The bigger question is whether this Budget will boost the public’s confidence to loosen their purse strings. It’s an ‘old-fashioned budget’ with taxes rising substantially to match spending. Although, there is a healthy dose of borrowing aimed at investing in public services and other infrastructure projects, which may elevate the public’s confidence. So what does it mean for builders? National Insurance rises National Insurance (NI) rises have not been imposed on the employee, but on the employer. So employees won’t see changes to their pay packets, but employers will pay more. The threshold has been raised to 15.0 per cent from 13.8 per cent on salaries above £5,000. This may affect future decisions made by a company such as wage rises and employing new staff, as employers will need to shoulder higher costs. However, Employment Allowance – aimed at smaller companies to reduce their NI contributions – has been raised from £5,000 to £10,500 so companies with a small NI contribution may benefit or see little difference.
Chancellor of the Exchequer Rachel Reeves
Wage rises The legal minimum wage is rising, which will affect a company’s outgoings: ● Over-21s will earn £12.21 per hour, up from £11.44 ● 18 to 20-year-olds will receive £10, up from £8.60 ● Apprentices under 19, or those over 19 in their first year of training, will see an increase of 18% from £6.40 to £7.55.
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