UK Plc Seeks Share of Voter Tax Cuts Planned by Hunt in Budget

Joe Mayes
·4 min read
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(Bloomberg) -- Prime Minister Rishi Sunak and Chancellor of the Exchequer Jeremy Hunt have long suggested they see next month’s budget as an opportunity to prioritize tax giveaways for voters. And despite benefiting just three months ago from measures that Hunt described as the “the biggest ever boost for business investment,” Britain’s business community is hoping for more.

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“The Budget is an opportunity to build on that good work and further accelerate help for business,” British Chambers of Commerce Director General Shevaun Haviland said in a statement. The budget “must outline the sustainable growth plan businesses are crying out for.”

Hunt in November made permanent a tax break known as full expensing, affording companies 25p of relief on every £1 ($1.26) invested in plant and machinery. With the chancellor saying he wants to lift economic growth in his budget on March 6 — the UK entered a mild recession in the second half of 2023 — Haviland’s BCC and Britain’s other major business lobby groups are calling for cuts to business taxes, plugs for labor shortages, tax-free shopping for tourists and improvements to infrastructure.

Here are the top requests from UK firms:

Cut Business Taxes

Groups including the BCC, Confederation of British Industry and MakeUK want Hunt to reduce how much companies pay in business rates — a flat fee based on the value of their premises. The government usually increases the amount firms have to pay in line with inflation data from September, and the British Retail Consortium says Hunt should use the lower level forecast for April 2024 instead.

“You can provide the industry with some breathing space,” BRC chief executive Helen Dickinson said in a letter to Hunt last month. “The time to act is now.”

Hunt is also being urged to lift the £85,000 revenue threshold after which firms start paying value added tax. The Federation of Small Businesses said the threshold should be increased to £100,000.

“VAT remains a giant headache,” said Martin McTague, the FSB’s national chair, in a statement. “The current threshold stifles firms who want to grow but instead, purposely teeter below it to avoid extra costs.”

And while Hunt was applauded by executives for introducing full expensing late last year — a 100% tax relief on investment in plant and machinery — both the CBI and MakeUK want the policy to be extended to include leased and rented assets.

Fill Skills Shortages

Addressing Britain’s weak labor market — there are 932,000 job vacancies according to latest data — is another top ask for businesses, with the CBI saying skills shortages are “holding back long-term investment.” To help address the issue Hunt should deliver on the planned expansion of free childcare and increase non-taxable health support for employees, the CBI said.

The BCC said Hunt should reform the apprenticeship levy to allow firms to spend it on other forms of skills training for their employees. It also said funds raised by the immigration skills charge — a fee paid by employers when recruiting from overseas — should be better targeted to boost training in areas of need. The Institute of Directors said Hunt should give firms a tax credit if they train employees in areas where there is a national skills shortage.

Tax-Free Shopping for International Visitors

Businesses also want Hunt to re-introduce tax-free shopping for international visitors to the UK, a policy which expired in 2021. The move would boost tourism and stop a shift in luxury shopping away from London to destinations such as Paris and Milan, the BCC said in their budget submission. The UK’s fiscal watchdog, the Office for Budget Responsibility, is currently reviewing the costs and benefits of the proposal, which is also being pushed by the BRC.

Improve Infrastructure

Both the CBI and BCC are calling on Hunt to speed up the delivery of infrastructure, including by providing local authorities with more funding to make faster planning decisions. MakeUK said Hunt should bring in measures to spur extra capacity in Britain’s electricity grid and fix the current queuing system for new connections.

Speed Up Net Zero

Hunt should spell out spending plans to drive the UK’s drive toward net zero greenhouse gas emissions, the CBI said, saying there’s been “little policy clarity on a plan to incentivize investment.” The plan should “identify where green investment gaps lie and where private finance can be crowded in,” it said.

Green investment has been a hot political topic recently, with Sunak scaling back Tory plans last year and the opposition Labour Party outlining a retreat of their own earlier this month on their longstanding plan to invest £28 billion annually in the net-zero transition.

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