Emotions run high ahead of 'biggest Budget in a generation'. Here's what to expect
Pre-Budget leaks, and that remark about 'working people', have stirred strong emotions ahead of this week's speech by the Chancellor. James Geary of Randall & Payne picks over what it could all mean.
Dear readers,
We had quite a different story planned for today, but we’ve been unable to ignore the emotion - white hot in some places - bubbling away ahead of Wednesday’s Budget. We know business people do best when they have clarity and hope. We hope our main story helps.
You only have to check out LinkedIn - generally home to excited marketing speak and positive vibes - to see long threads erupting from passionate posts by real business people angry at what appears to be coming down the line.
The Telegraph’s website reported how the Startup Coalition lobby group told it that founders’ confidence in Britain will be “shaken” further if the Chancellor Rachael Reeves targets entrepreneurs with an increase in capital gains tax.
“Hundreds of technology entrepreneurs are preparing to quit the UK amid concerns over Rachel Reeves’ Budget”, said the report.
Cheltenham entrepreneur and businessman Oliver Bruce, founder of Pinpoint Media was one of those who spoke up in response to the suggestion Reeves could be about to try to raise £20 billion through a rise in National Insurance.
Bruce, 31, is the epitome of an entrepreneur, starting his company while still a student the the University of Gloucestershire and going on to grow PinPoint into a respected performance marketing agency employing 50 staff.
He was recently named LDC Top 50 Ones Watch and has done well enough to also be an angel investor himself too.
“A rise in NI (National Insurance) will mean employers hold onto pay rises due to the compound effect a pay rise will have on the overall liquidity of a business,” said Bruce.
“This therefore means less money in the employees pockets, less spend in the local area, a hit to the economy and an impact to GDP.”
He shared the common theme emerging in reaction to all they’ve heard so far, that business people believe entrepreneurs will be discouraged and investment, growth and job creation discouraged too.
And yes, felt strong enough to declare they were thinking of moving their businesses overseas.
Sir Keir Starmer’s comment about ‘working people’ not being hit by tax changes has been interpreted by many as a worry sign of how little the Prime Minister understands entrepreneurs and business people and they are concerned.
Neill Ricketts, chief executive officer of 720 Group, executive chairman of gas sensor company, GSS Ltd, founder and former CEO of Versarien PLC, a member of the Forest of Dean Economic Partnership and a former GFirst LEP board member, posted: “Unfortunately this is the reality , the UK has killed the golden goose (or geese) through a series of deliberate actions meant to kill entrepreneurial spirit. it started with effectively removing entrepreneurs relief and now includes some of the highest levels of red tape and taxes. it is unfortunately time to leave the UK for any rational person.”
On Wednesday business people will gather at Gloucester Rugby’s Kingsholm stadium to watch the Budget live at the invitation of accountants and business experts Randall & Payne and wealth management firm Rathbones.
James Geary, a partner at Randall & Payne and one of the expert panellists who will take questions at that event, kindly put down some of his thoughts ahead of time in an effort to clear some of the smoke away - and maybe, just maybe, help people sleep a little better for the next two nights! A massive ‘thank you’ to Mr Geary from us here at Raikes.
Randall & Payne is one of the Founding Partners of The Raikes Journal, one of those who have made this digital operation possible. Like us, it believes in a quality, journalistically-led service covering Gloucestershire is worth investing in. You can join them, either as a fellow Founding Partner or as a paid-up subscriber.
Subsciption allows you to see across the paywalls that fall on all our copy after two weeks and many of our Thursday and Friday email editions. Please do consider it. We’d love to have you on board.
NB: Raikes publishes probably the best-read business-related newsletter, pound for pound, in Gloucestershire.
Your briefing notes…
🍕 London-headquartered pizza restaurant Japes has revealed plans to open its first eatery outside the capital - in Gloucestershire. The firm already has businesses in Camden, Greenwich and Soho. Japes will open on The Promenade in Cheltenham in the New Year with fit-out of the restaurant due to start on Monday 11 November.
💷 Green Energy, the Wiltshire-based energy firm, is said to be in takeover talks with Dubai-based technology group Esyasoft. The deal is said to value the group at about £50 million. What has that got to do with Gloucestershire? The firm was founded by Stroud entrepreneur Juliet Davenport, who remains a major shareholder.
💷 Gloucester BID, the business improvement district group that represents the city’s traders and companies, is promoting the re-launch of a retail loyalty card in the run up to Christmas. The card is part of the Mi Rewards scheme and gives holders the likes of money off products and services, free experiences and discounted gift cards. You simply link your bank card to the reward card and technology does the rest. Users earn points for shopping with more than 90 Gloucester businesses, which they can then spend on exclusive offers from local businesses. Find out more here.
💡 Administrators have been appointed to Cheltenham firm Seventynine Lighting Ltd. The Gloucester Road business has ceased to trade with the loss of 30 jobs. The business worked with a number of retail and commercial fit-out firms as a lighting design and installation contractors. It was reported last month that following the collapse of construction giant Interior Services Group (ISG) it was expected a number of contractors would be pulled down too. It’s understood Seventynine Lighting was landed with £2 million of bad debt as a result.
Appeal launched for Imjin Memorial to honour Glorious Glosters from the Forest of Dean
An appeal has been launched to raise funds for a memorial to commemorate veterans who fought with 1st Battalion, The Gloucestershire Regiment (Glorious Glosters) in the Battle of the Imjin River in Korea, from 22 to 25 April 1951. The Imjin Veterans’ Memorial will honour the fifteen men associated with the Forest of Dean to recognise their bravery in battle and unwavering camaraderie and spirit to survive over two and a half years in the inhumane conditions of the prisoner of war camps in North Korea. The memorial is being overseen by the Imjin Veterans’ Memorial Steering Group, formed following a Forest of Dean District Council motion on the 70th anniversary of the battle. Anyone wishing to contribute can do so here.
Our to do list…
Monday 28 October - A specialist session for those in the music industry. This is a special session on digital marketing for anyone in that sector, repsented by Robbie Semmence. Due to take place at The Music Works Hub, King's Square, Gloucester, this evening from 5pm to 7pm.
Tuesday 29 October - The Growth Hub is Stroud is due to stage another of the network's many workshops - this one about how to create a video content strategy to drive more website traffic. Due to take place from 10am to 1pm. Visit The Growth Hub's website to find out more.
Wednesday 30 October - The Budget! Chancellor Rachael Reeves is expected to speak at around noon. Those lucky enough to get a ticket to Randall & Payne’s Budget Live event at Kingsholm will also be able to get the immediate view of its expert panel post speech.
Thursday 31 October - Still trying to work out what it all meant! Kellands Financial Planning is due to stage its post-Budget debrief event at Queens Hotel, The Promendade, Cheltenham, GL15O 1NN, from 10am. More information on Eventbrite.
Friday 1 November - Orchard Street Market returns to Orachard Square at Gloucester Quays featuring everything from crafts to drink, food, vintage, and art. From 10pm to 5pm.
* The Reports & Deals section of Raikes is also home to its star attraction, the perpetual Top 100-plus Businesses in Gloucestershire list, which tracks the financial fortunes of the county’s biggest firms by turnover. We would like to thank the generous support of our Founding Partners: QuoLux, Willans LLP, Gloucestershire College, Merrell People and Randall & Payne; our sponsors Hartpury University and Hartpury College; our Founding Members and all our wonderful paying subscribers. A massive ‘thank you’ to all our other subscribers too. Your support is invaluable! If you are not already, please consider upgrading to paid (just £2.30 a week!). You’ll be able to read all of this post - and you’ll be helping to make this community interest company sustainable. Contact andrew.merrell@raikesjournal.co.uk.
Emotions run high ahead of 'biggest Budget in a generation'. Here's what to expect…
Pre-Budget leaks, and that remark about 'working people', have stirred strong emotions ahead of this week's speech by the Chancellor. James Geary, of Randall & Payne, picks over what it could all mean.
By James Geary.
It feels like we have been holding our collective breath for this week’s Budget, writes James Geary, head of corporate tax at Randall & Payne.
Not since 1997 has a new government been elected with such a landslide which gives a new Chancellor the opportunity to make sweeping and unpopular announcements that they feel necessary to help the economy recover.
The government has sounded continuous warnings about the “pain” some may feel due to the black hole they claim to have inherited.
So, what can we expect on Budget day this Wednesday?
There has been wild and varying speculation, so, together with some of my own predictions, I have picked out a few recurring themes.
Income Tax
We have been promised no headline rate changes for any of Income Tax, National Insurance or VAT. However, that has since morphed into “no tax increases for working people” although only last week we got a better idea of what the government mean by “working people”.
It seems “working people” does not include business owners or people with additional assets (e.g. savings or property), only lower earners, but not those who own or hold shares in a business.
This is considerably narrower and gives a lot of scope for targeted tax increases, without raising headline rates.
It is expected that the long-standing freeze on income tax thresholds will be continued for another two years beyond the current 2028.
This measure by itself is expected to raise an additional £7 billion in tax for 2029-30 due to the effect of “fiscal drag”, where thresholds do not keep time with pay rises.
If the employer NIC threshold were also frozen, an additional £1 billion would be added to this.
The new clarity on “working people” could pave the way for other changes to taxes on e.g. property income or savings income, such as reducing tax free thresholds or restricted tax relief on certain expenses.
Capital Gains Tax
It is almost certain there will be some significant increases here. CGT receipts in the third quarter of this year have skyrocketed due to people selling up assets and businesses in anticipation of increases. Here are some areas where we could see change:
Business Asset Disposal Relief – I did not believe this would be impacted until late last week, however there is now fresh speculation that it may be either abolished, or more likely reformed.
Rates of CGT are likely to increase. It is possible they will align once more with Income Tax rates, but that would be a huge increase, so a smaller, but still significant increase is more likely. Rates on commercial property and shares are likely to increase but potentially not the rate on residential property which is at 28 per cent. It was dropped to 24 per cent in April 2024, but I consider this unlikely to continue as an increase in rates to align with that 28 per cent top rate seems a high probability.
The uplift of asset values on death could be removed – currently on death, the beneficiaries of the estate inherit assets with a CGT “base cost” of probate value. This is perhaps less likely as it will not increase tax revenue in the very short term.
There have been a few suggestions about a “wealth tax” such as that in many other countries. Such a tax would not be introduced straight away but we may well see a consultation launched on how it may work.
Pension Relief
There is almost certainly going to be some changes to pension relief such as
Higher rate tax relief for individuals is likely to be curtailed, with speculation of a potential flat 30 per cent relief.
There is also a widespread rumour that employer NIC will also be due on employer pension contributions, which could raise an additional £10 billion for the Exchequer.
It is also possible that a lifetime allowance cap on pension funds could be reintroduced, as well as a reduction in the amount that can be drawn down tax free on retirement.
Inheritance Tax
Several potential changes have been suggested here:
Reform of agricultural and business property reliefs – either reducing or phasing out.
Increasing the seven-year timescale for “Potentially Exempt Transfers” in lifetime to 10 years. Although this is less likely, some have even suggested abolishing the lifetime gifts rules so that lifetime gifts are simply accumulated and then included in the tax calculation for the estate on death.
Inclusion of residual pension fund in death estate (currently excluded).
Extending the freeze on the £325,000 nil rate band – although this could be increased instead alongside abolition of the £175,000 “main residence nil rate band”.
Abolition of the exemption for “gifts from surplus income”.
Again, changes to these rules would not increase tax taken in the very short term so may be lower priority, so we may simply see a wider consultation period begin to cover reform of the tax.
Stamp Duty Land Tax
The current temporary increases to the lower thresholds for SDLT on property are due to expire in April 2025, so it is likely that they will not be extended. In addition, there is a good chance that the additional surcharge for non-UK residents may be increased – this has been suggested already in order to fund the recruitment of additional planning officers.
Corporation Tax
No major changes are expected here, and the government has committed not to increase the main rate above the current 25 per cent for the duration of the Parliament.
We are expecting the publication of a draft “Business Tax Roadmap” at the Budget which will give a good idea of government thinking for future business tax reform.
Employer’s National Insurance
The rumours of an increase here had quietened down somewhat as the Budget drew closer, but a fresh story on Friday suggested a general increase may well be on the cards. It does remain a distinct possibility that this rate could be increased from its current 13.8 per cent, perhaps to 15 per cent. That increase would raise around £11 billion per year, and if the starting threshold is also lowered, this figure could be a lot higher.
In summary
It is clearly going to be a huge, wide-ranging budget, and the speculation has been far reaching.
However, if I had to pick out the three things I consider the most likely to happen, they would be:
Employer National Insurance on pension contributions
Continued freeze of Income Tax thresholds
Increasing headline rates of Capital Gains Tax
Do keep an eye on our social media channels and website on Wednesday for our coverage as things unfold and detailed breakdown of all the announcements and what their implications may mean to us.
We’ll be running a full report on Randall & Payne’s event post Budget with all the salient points from the panel of experts.