HTA Policy Executive, Thomas Rhys Dunn, writes on what the industry might be able to expect from tomorrow’s budget.
The new Government’s first budget
Following Prime Minister’s Questions tomorrow afternoon, the new Chancellor, Rishi Sunak, will deliver the first budget of the current Parliament following the December 2019 election.
This budget, which is also the first budget of Boris Johnson’s premiership, had initially anticipated to be a large budget with key announcements to formalise commitments made in the Conservative Party Manifesto.
However, following the recent change of Chancellor, as well as the economic impact of coronavirus, it is now expected that some of the largest measures will be scaled back and will instead be announced later this year as part of the 2020 Spending Review, as well as a possible second budget in Autumn 2020.
The Chancellor is likely to increase spending to tackle coronavirus and possibly the Government’s regional plans to ‘level up’ the economy, while also sticking to the Conservative Party Manifesto commitment not to increase income tax, national insurance tax or VAT.
It’s possible that the Chancellor could do this by increasing borrowing, but it is more likely that he will aim to raise tax revenue via other sources.
Help for businesses affected by the coronavirus, including a possible short-term ‘tax holiday’, is expected but the detail and what tangible support this would amount to is still to be seen.
It is expected that tomorrow the Chancellor will announce a much-anticipated review of business rates, as well as confirming the already announced 50% retail discount from 2021, which would be a welcome step in reforming the current system which is no longer fit for purpose.
Further announcements could possibly include measures on flexible working.
With many people choosing to work in our sector for the flexibility it offers, we are urging the Chancellor to back the flexibility needed in the marketplace, reflecting the seasonal nature of horticulture.
A number of the possible tax changes being considered could have significant implications for the industry.
As part of a wider package of reforms to inheritance tax, it is expected that the Chancellor will end or tighten Agricultural Property Relief (APR) and Business Property Relief rules (BPR).
APR and BPR are crucial in providing family-run businesses with the confidence and stability to invest, innovate and grow for the long-term without their businesses being hit by significant inheritance tax charge when handing a family business from one generation to the next.
Further measures are expected to include scrapping entrepreneur’s relief, which reduces the Capital Gains Tax for people selling their business, and dropping the planned cut to corporation tax from 19 percent to 17 per cent in April 2020.
An end to the freeze on fuel duty on red diesel for off-road vehicles and machinery, as well a possible increase on all fuel duty, is also thought to being considered by the Chancellor.
It is also being reported that the Chancellor is considering the introduction of a £640m “nature for climate” fund to plant 75,000 acres of trees a year by the end of the parliament, as well as restoring peatland.
This would be welcome but also needs to come as a wider package of support to ensure that businesses have the incentives, flexibility, capability and skills needed to be able to meet the Government’s targets on tree planting.
What the HTA are saying
Ahead of the budget James Clark, Director of Policy and Communications at the HTA has said: “With the immediate challenges presented by coronavirus we would welcome Government introducing a ‘business tax holiday’ through this very difficult period.
The British garden retail industry has shown consistent year on year growth for a number of years, but our retailer, grower, landscaper and manufacturer members all need economic certainty as we approach this key time for the garden trade. Progress on the EU post transition trade situation, a flexible approach to the labour market incentivising workers to join the industry and a long-overdue review of business rates are much needed. The Government has made some strong pledges around the environment, but specific and direct fiscal support for UK nursery production sector is required to help it grow and meet increasing demand, in a biosecure manner.”
Tomorrow we will be closely monitoring developments and will be responding to the Budget in full once it has been announced, as well as informing members on what it will mean for them.
If members have any comments on any of the budget announcements please do let me know at firstname.lastname@example.org.
Thomas Rhys Dunn