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SMEs reveal their Budget wishlist: Budget must not be "another Liz Truss turkey with unfunded tax cuts"

ended 28. February 2024

Newspage asked a selection of business owners across all sectors — from mortgages and retail to marketing and tech — what they would like to see announced in next week's spring Budget. One said “the Budget must include more Cost of Living payments”, while another added: “I would like to see the Chancellor help the personal service companies who have seen their rates rise for both corporation tax and dividend payments." A third said: “Personally I think a good move would be to cut the rate of VAT, especially for the hospitality and leisure sector, by 10% and the general rate of VAT by 5% for a restricted period of, say, 3-4 months.”

And while some were positive about the possible introduction of 99% mortgages, others were less so. One business owner simply said: “What we categorically need to avoid with this Budget is another Liz Truss turkey with unfunded tax cuts in the current administration's desperation for electoral votes. The markets will be unimpressed and borrowing costs could skyrocket.” Another concluded: “If the Chancellor doesn't either increase the income tax thresholds or reduce Corporation Tax (ideally both), the Tories can no longer claim to be the party of enterprise.” The views of 22 small business owners are below.

21 responses from the Newspage community

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Andrew Montlake
Managing Director at Coreco
What we categorically need to avoid with this Budget is another Liz Truss turkey with unfunded tax cuts in the current administration's desperation for electoral votes. The markets will be unimpressed and borrowing costs could skyrocket. Housing is a big play, and whilst many of their options concentrate on the demand side and could be considered inflationary, some kind of further stamp duty incentive could be an easy win. The idea of 99% mortgages does not appear to have been thoroughly thought through and and this could very easily be another damp squib that causes issues and helps few. Fundamentally we need to see a commitment to more social housing, a roll back of some of the tax treatments of landlords to ease pressure on the private rental sector, easing of planning and the establishment of a cross party committee led by a Housing Tsar to make long-term plans beyond the length of the current Parliament.
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Daniel Wiltshire
Actuary & IFA at Wiltshire Wealth
Small businesses feel utterly betrayed by this government. It's as if the tax changes of the past few years have been specifically designed to demoralise the most productive part of our economy. If the Chancellor doesn't either increase the income tax thresholds or reduce corporation tax, ideally both, the Tories can no longer claim to be the party of enterprise.
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Steph Briggs
Creative Director at Steph Briggs Marketing
An update in VAT thresholds is urgently required. Given the increase in the cost of everything over the past few years, the VAT threshold needs to reflect this. It would be a lifesaver for many small businesses.
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Keith Budden
Managing Director at Ensurety
Jeremy Hunt finds himself caught in the proverbial 'Catch 22'. We need to boost economic activity while at the same time not driving up inflation, which increases (or slows the decrease of) interest rates. Personally I think a good move would be to cut the rate of VAT, especially for the hospitality and leisure sector, by 10% and the general rate of VAT by 5% for a restricted period of, say, 3-4 months. This should drive up personal spending without impacting inflation. The joy of a VAT reduction is it is a benefit to everyone, not just the higher paid. It would also prove a real Brexit benefit. Yes it's short term but I think it would give the economy the kick it needs. We really need to get the economy into action again. We can't continue in this permanent sense of malaise that is suppressing business activity. Let's do it, let's head for the sunny uplands, not dwell in the cloudy valley we appear to have found ourselves stuck in.
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Rebecca Seeley Harris
CEO at Re Legal Consulting
I would like to see the Chancellor help the personal service companies who have seen their rates rise for both corporation tax and dividend payments. They have also had to deal with the off-payroll working reforms (IR35) and many have become zero-rights employees if they are found to be inside IR35. They pay full employment taxes but receive no rights or benefits. The Chancellor should ideally repeal IR35, which is what David Davis has been calling for but, if he doesn't he should bring in reforms to make taxes fairer for the PSCs. He should also stop the freeze on the income tax threshold. This is impacting a lot of people because of fiscal drag. More and more people are being dragged into a higher bracket because of inflation so this would be of benefit to all.
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Katie Hughes
Director at Tamworth Financial Services
I truly hope that the 99% mortgage becomes a reality. After chatting with peers in the industry, I've realised I might be in the minority on this, but I really do think that the 99% mortgage could be a game-changer for first-time buyers. These days, everything is so expensive, and it's tough for people who rent to save up for a deposit while still keeping up with monthly bills. It must feel like an impossible task. I'm genuinely curious to see how the 99% mortgage will work in practice and what kind of hoops customers will need to jump through to qualify.
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Ross Lacey
Director & Independent Financial Adviser at Fairview Financial Management
Reductions in corporation tax for smaller businesses, reductions in dividend tax and higher dividend allowances. More clarity around the lifetime allowance, and perhaps even a complete removal of any lifetime restriction given there are still annual limits on what can be contributed. An increase in the annual allowance for pensions and a higher threshold or even removal of any taper for higher earners. It would also be good to see consideration given to the compulsory requirement for financial advice on defined benefit pension transfers. If people want to take the responsibility for this themselves and are happy to do this, they should be treated as adults and given this option.
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Stephen Perkins
Managing Director at Yellow Brick Mortgages
The Government's plans for the housing market in the upcoming Budget will probably underwhelm. Almost certainly it will include their touted 1% deposit mortgages, which won't help many who cannot afford a mortgage for 99% of their needed house price, and maybe they will dust off the stamp duty holiday banners, again to little avail as first-time buyers can already buy up to £425,000 without paying stamp duty. I would be truly amazed if anything innovative and useful was announced in the Spring Budget, and ultimately Hunt has higher burning priorities to consider.
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Ben Perks
Managing Director at Orchard Financial Advisers
The key thing is that any announcements are costed properly. Whilst the Chancellor will be going for headlines, he needs to learn from the mistakes of his predecessor: a bad budget could be excruciating for our economy. We need to see announcements that improve the economic outlook for the years ahead, this will provide stability and certainty. In the mortgage industry, this leads to better SWAP rates and, ultimately, better interest rates for borrowers. It would be good to see improvements to Stamp Duty, or at least an extension of the current reliefs and an uplift of the 25% that the government give to first-time borrowers with lifetime ISA's. These changes would help to give purchasers confidence.
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Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
Taxes on the individual need to fall: lower VAT and increased personal allowance. These would not be inflationary and would inject life back into the economy. Business taxes should be cut, allowing firms to invest and recuit. Slashing the corporation tax rate and removing employers national insurance would be the quickest way of injecting growth into our stagnent GDP.
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Michelle Lawson
Director at Lawson Financial
We need to see an incentive in the housing market. The ideal would be to remove the burden of the higher Stamp Duty for landlords. Initial research has shown this would potentially put just under 1m properties back into the private rental sector. Not only would this help to alleviate the housing crisis, it would also get the yo-yoing property market and all the associated industry that goes with it back up and running. This would go no end to improve the economy in many ways.
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Kylie-Ann Gatecliffe
Director at KAG Financial
As mortgage brokers, we are desperate to see something announced to support first-time buyers. Whilst the 99% mortgage has been discussed, whether this happens in reality is a different thing. The biggest barrier we see at the lower end of the market is affordability. There are many people paying crazy amounts in rent that we know would comfortable be able to make a mortgage payment (usually because it's lower) but the affordability testing used by lenders just doesn't stack up for many first-time buyers, leaving them trapped in rented accomodation with rising rents, which makes it even harder to save a deposit. We still have many enquiries on Help to Buy, even though it isn't available anymore, meaning that there is the appetite for schemes that allow borrowers to be able to scale up on their property purchase. Whilst this is a balancing act because first-time buyer demand will always push house prices up, there are too many people trapped by rising rents with no way out.
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Gary Bush
Financial Adviser at MortgageShop.com
Jeremy Hunt needs to really focus on the state of the country rather than further new build only schemes, and other worthless initiatives. The only property front tweaks that would probably help the Tories with the general public is a raising of inheritance tax threshholds added to a change to how stamp duty is charged, taxing the seller and not the buyer and giving elderly downsizers a stamp duty break to attempt to free up more properties at the top end of the market.
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Graham Cox
Director at Bridging Hub
With public services chronically underfunded, and local authorities going bankrupt, this is not the time for tax cuts. We need a properly funded NHS and social care, and much greater investment in schools, law and order, and so on. So any spare funds Jeremy Hunt has at his disposal should be directed there, not towards a cheap electoral bribe that we'll all pay for with interest after the election. On the tax front, I would like to see the tax burden shifted away away from earned income towards unearned income, by increasing the capital gains tax rate. Council Tax is long overdue a review as well, with owners of expensive houses paying proportionately less than owners of cheaper properties.
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David Grove
Owner at Simplicity Ceremonies
I would like to see the standard personal allowance raised from £12,570 to £13,200. This would help the low-paid and the 4.73 million people in the UK who are self-employed and who are also often in this category themselves.
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Ben Foster
CEO at The SEO Works
Spring Budgets typically focus on incremental adjustments rather than major policy changes. However, with a General Election looming, the Chancellor might consider more significant measures to influence voters. Such announcements are likely to be ones for the future, rather than any immediate implementation, to help with a political message in the run up to an election. I don't expect to see any major announcements that will help all businesses, such as cutting VAT rates, and any new measures will be specific to a business sector. Fuel duty is the most possible option for tax relief in the upcoming Budget. Originally scheduled to rise by 5p in March and again based on inflation in August, these would be the first increases since 2011. I expect these changes to be shelved.
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Dan Pritchard
Co-founder at Tech South West
We would love to see strong support for tech and science in the Spring Budget, especially around the startup ecosystem and fostering innovation at an early stage. The government has shown itself capable of pragmatic leadership in this area - rejoining Horizon, hosting last year's AI safety summit, investing in quantum innovation. Building on this, an emphasis on enabling local leadership and nurturing ecosystems like the vibrant tech sector we have in the South West would be a welcome move from the Chancellor. Green and blue science are a key strength of the UK, and we would like to see greater recognition of this with an ambitious, comprehensive strategy to leverage the country's potential to be a world leader in renewable science and sustainable growth.
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Mark Robinson
Managing Director at Albion Forest Mortgages
This government needs to make a pledge of a replacement scheme for Help to Buy, which ended with no viable replacement. The rumours of a 1% mortgage may sound like a good scheme potentially, but I fear that they may have criteria or rates that make them unviable.
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Jai Khandpur MRICS
Investment Manager at IP Global
This Budget is the final opportunity for the Government to lay out its plans before the next General Election, and with the polls forecasting Labour, the Conservatives need to appease voters. For the housing market, interest rates have undoubtedly had a detrimental impact, with Nationwide reporting that prices dropped 2.7% in 2023. Lloyds Bank has forecast a further 2.4% decrease in house prices over 2024. However, it expects prices to then recover slightly in 2025. Should the current government wish to stimulate the market, a reduction in Capital Gains Tax or Inheritance Tax would certainly attract investors back into the market, even while interest rates remain at a higher level. An SDLT holiday or the return of buying schemes such as Help to Buy would draw first-time buyers and owner-occupiers. With all that said, interest rates remain the biggest objection for purchasers, and until these begin to drop, there will still be hesitation within the market.
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Helen Thomas
COO at Ridgefield Consulting
Rishi Sunak needs a miracle to win the election but Jeremy Hunt won’t be able to pull any vote-winning rabbits from his Budget hat. The spreadsheet just doesn’t add up with low growth, stubborn inflation and interest rates still high. There’s little room for manoeuvre so watch out for big announcements with small numbers behind them.
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Jenny Blyth
Small business owner at Storm in a Teacup Gifts
The Budget must include more Cost of Living payments. They denied there would be a recession and yet here we are. Truss put our economy in the toilet so it’s time to pick up the pieces. Those of us who are now relying on the likes of Universal Credit to make ends meet deserve to be given these payments. Small business owners are having to get second and even third jobs to make ends meet, so the least Hunt can do is offer us a lifeline.