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Budget REACTION: ‘The hard-working business owners and entrepreneurs have been overlooked’ as tax, payroll and NIC costs rise, says Chamber

Northamptonshire Chamber of Commerce reacts to today (Wednesday)'s Budget statement in Parliament and its impact on businesses.

CHANCELLOR Rachel Reeves has presented the most significant tax-raising budget in modern British history, positioning businesses as a key source of funds to address the UK’s £22 billion budget deficit and maintain critical public spending.

Making history as the first woman to deliver a budget, Reeves outlined an Autumn Statement with policies aimed to generate an additional £40 billion in annual revenue from the corporate sector for the upcoming financial year.

This marks the first Labour Autumn Statement in 14 years and sets a new tax record, with the percentage of GDP collected in taxes projected to hit 38% by 2029-2030.

A notable component of the Chancellor’s plan is a 1.2% increase in employers’ National Insurance contributions, raising the rate to 15% from April. Additionally, the secondary threshold for National Insurance has been lowered from £9,000 to £5,100.

The government expects these changes to bring in £25 billion over the next five years. In light of the tax hike, the Chancellor emphasised that the employment allowance, which mainly benefits smaller companies, has doubled to £10,000, extending relief to all businesses – a change from previous restrictions on eligibility.

Other highlights include the decision to keep corporation tax at a fixed rate of 25% for the remainder of the current parliament. The Chancellor justified the adjustments as “difficult decisions on tax” while stressing their role in protecting the country’s financial health and public services.

Simon Cox.

Simon Cox, head of policy at Northamptonshire Chamber of Commerce, expressed concern over the impacts on local business owners. “The Chancellor spoke about protecting working people but the hard-working business owners and entrepreneurs have been overlooked here,” he said.

“This budget will place further pressures on businesses with increased taxation, increased payroll costs and National Insurance contributions any may see hesitation when it comes to employment within the county.”

In addition to tax changes, substantial increases in minimum wages are expected to affect SMEs. Starting next April, wages for workers over 21 will rise by 6.7% to £12.21 per hour and younger workers aged 18-20 will see a 16.3% increase, raising their hourly wage to £10. The Chancellor reiterated the government’s commitment to ultimately creating a single adult rate to “transform” the workforce.

She also announced a two-tier Business Rates system, which introduces a “higher multiplier” for high-value properties and reduces the relief for retail and hospitality businesses from 75% to 40%, effective from the 2026-27 financial year.

Properties in the agricultural sector and business property reliefs will be capped with maximum relief set at £1 million, taxing anything above that threshold at 50%.

The bold measures outlined in today (Wednesday)’s budget reflect Labour’s commitment to balancing fiscal responsibility with social welfare, although the corporate sector is positioned to absorb much of the financial impact.

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Corporate tax rises may hinder growth rate but we can still expect 2% next year

Professor Joe Nellis.

Professor Joe Nellis, chartered accountants MHA‘s economic adviser and Professor of Global Economy at Cranfield School of Management, gives his assessment of the government’s Budget Statement delivered in Parliament earlier today (Wednesday).

THIS Budget is unlikely to stimulate economic growth in the short term, given the scale of tax increases hitting the corporate sector.

But the economy was already showing modest signs of recovery and we can expect to see growth heading towards 2% in 2025 – an improvement from the flatlining of recent years.
However, interest rates are likely to fall slower than previously expected as a result of this Budget, although we still expect to see another cut before the end of this year. The scale of public sector expenditure, increases in the minimum wage and the likelihood that National Insurance charges will lead to higher costs of employment will put some upward pressure on prices.
There is also a danger that these changes in the private sector regarding National Insurance and the minimum wage result in job losses, ultimately harming the ‘working people’ the government had promised to set out to protect.
While the inflation peak of October 2022 was largely caused by external factors and these have now calmed, inflationary pressures remain in the form of domestic wage growth.
This Budget will have done nothing to alleviate these pressures and there is a risk of a continued wage-price spiral. This has been a concern of the Bank of England. As a result, the 2% inflation target is not likely to be met on a sustained basis for a few years.

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