Some good news for small business – but is it enough?

The raising of the VAT threshold for small businesses announced by Jeremy Hunt in his Budget statement is undeniably welcome news.

However, raising it to £90,000 falls short of the £100,000 figure that the Federation of Small Businesses had been calling for. Also, it has to be pointed out this is the first increase in seven years.

The hospitality industry will welcome the extension to the freeze on alcohol duty but there will be disappointment the VAT changes didn’t include measures specifically designed to help a sector that continues to be under real pressure.

The VAT rate for hospitality and tourism businesses was reduced during the pandemic but that scheme came to an end in April 2022.

Any new measures to ease the burden would have been widely welcomed. The chancellor said the government was backing “the great British pub”. The industry may well have a different opinion.

The freeze in fuel duty will also be helpful to many small businesses when it comes to transport costs.

The announcement that the higher rate of capital gains tax on residential property will be reduced from 28 per cent to 24 per cent came as a surprise. The thinking behind it is that the lower rate will result in more transactions, leading to more tax revenue.

The chancellor said the furnished holiday lettings (FHL) regime, which gives extra tax reliefs for costs incurred furnishing holiday lets, will be abolished. He will also removing multiple dwellings relief.

The government will hope that the much-predicted 2p cut in National Insurance will be a vote-winner. Coupled with the announcement in the autumn statement the reduction in NI is worth about £900 a year for the average worker.

Whether that figure and the package of measures announced by Mr Hunt will be enough to change the political dial remains to be seen.

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