ACS has responded to the Chancellor's Spring Budget, welcoming a £300m discretionary rate relief scheme, but raising concerns over a minimum excise tax on tobacco, the costs for small businesses of introducing new tax reporting processes, and new tax rules for dividends paid to owner-directors.
ACS chief executive James Lowman said: "The £300m discretionary fund given to Local Authorities could provide welcome relief to the hardest hit by business rates increases. We are committed to working with the Department for Communities and Local Government on the formula for allocating discretionary relief funding across local authorities, and we will help members make their case for rate relief to their local authority. We are disappointed that there has been no targeted relief for petrol forecourts which are some of the hardest hit businesses as a result of the revaluation, but will support these stores in making a case to their local authorities for much needed help.”
The Chancellor also announced future plans to review the way that different business types have their rates bills calculated, but did not commit to a timescale beyond 'before the next revaluation'.
Mr Lowman continued: “We along with our business groups have repeatedly called for a proper fundamental review of the rates system to ensure that everyone pays their fair share. Businesses like rural petrol stations and convenience stores with cash machines providing an essential service to their communities should not be paying over the odds while internet distribution warehouses enjoy a decrease in their rates bills. We are disappointed that the government is not addressing these issues now, meaning the current inequities in the system will remain.”
In the Budget, the Chancellor confirmed plans to introduce a minimum excise tax from 20th May, at the same time as the introduction of Tobacco Products Directive introducing a minimum pack size of 20 cigarettes, and standardised packaging of tobacco.
ACS chief executive James Lowman said: "The introduction of a minimum excise tax is likely to increase the lowest price at which consumers can legally purchase a pack of cigarettes. This will drive more customers to the black market, which already costs the exchequer in excess of £2bn a year. More needs to be done on the ground to tackle the illicit trade and help responsible retailers."
On duty rates, ACS chief executive James Lowman said: "We will work with the Treasury on introducing a new duty band for still cider just below 7.5% abv.”
On the Government's Making Tax Digital plans, ACS chief executive James Lowman said: “The threshold for businesses to qualify for an additional year before they have to report their accounts quarterly has been set far too low at £83,000 turnover, and is irrelevant to convenience stores. We submitted evidence to Government and in parliamentary committees, calling for retailers to be given more time to adapt their software and in-store procedures to comply with the regulations, and sadly only the very smallest businesses will be given this additional time. Further support is needed from the government to support the smallest retailers to comply with the regulations.”
On the reduction in the tax allowance for dividend payments to owner-directors of small businesses incorporated as limited companies, from £5,000 to £2,000,Mr Lowman said: “Having been encouraged to become limited companies, the rules are again being changed so that these small business owners have to pay more tax on their often small profits. Convenience store owners work among the longest hours of any group in the country, and the further tax burden on these businesses is unfair.”
The full Budget document is available on the HM Treasury website here: https://www.gov.uk/government/publications/spring-budget-2017-documents
