Impact of the Spending Review on IBDs
Posted on in Business News , Cycles News , Political News
The Chancellor has delivered his Autumn Financial Statement and Spending Review to Parliament today, setting out the Government's key proposals for the year ahead. An overview of the main announcements affecting IBDs are outlined below.
Small business rate relief extended
"I am
today helping 600,000 of our smallest businesses by extending our small business rate relief scheme for another year."
Small Business Rate Relief will be extended until April 2017, which means that the smallest businesses under £6,000 rateable value will not pay any business rates.
However, the Retail Rates Relief scheme which was introduced in 2014 and currently delivers a £1,500 annual discount for retailers under £50,000 rateable value will not continue beyond April 2016.
The 2% cap on business rates will not continue beyond April 2016 and it will continue to be linked to RPI Inflation.
The Association of Convenience Stores (ACS) - working in partnership with ActSmart and 13 other trade bodies as part of the Independent Retailers Confederation - will be campaigning for this rate relief to be reinstated for small retailers.
Business rates review delayed
"Our overall review of business rates will report at the Budget 2016"
The chancellor announced that the Government's response to the Business Rates Review will be delayed until 2016.
The Review will look at how the Government can deliver fundamental reform of the business rates system. The Chancellor repeated announcements made at Conservative Party Conference that local authorities will be able to cut their rates to make their areas more attractive to businesses.
In areas where there are elected mayors, a 2% levy can be added to business rates bills for spending on infrastructure projects as long as they have the support of local businesses through Local Enterprise Partnerships.
ACS has called on the Government to respond to the review with changes to simplify the rating system and with more to incentivise investment.
Apprenticeship levy introduced
"Today I am setting the rate at 0.5% of an employer's pay bill. Every employer will receive a £15,000 allowance to offset against the levy - which means over 98% of all employers - and all businesses with pay bills of less than £3 million - will pay no levy at all."
An apprenticeship levy will be introduced from April 2017. The rate for the levy will be 0.5% of the business PAYE. Each employer will receive an allowance of £15,000 to offset against their levy payment. This means that the levy will only be paid on any wage bill in excess of £3 million and that less than 2% of UK employers will pay it.
The policy is designed to fund 3 million apprenticeships by raising £3 billion per year. This is designed to address what the Chancellor terms the enduring skills weakness of the British economy and will mean a doubling of apprenticeships spending by 2020.
Considering the future of salary sacrifice
"The government remains concerned about the growth of salary sacrifice arrangements and is considering what action, if any, is necessary. The government will gather further evidence, including from employers, on salary sacrifice arrangements to inform its approach."
No action is to be taken at this stage against salary sacrifice schemes which means Cycle to Work will continue. However, with Cycle to Work custom making up a high percentage of many IBDs sales, ACT encourage retailers not to rely on the scheme and look into alternative options, such as offering spread the cost finance.
Investment in cycling
"We're making the £300 million commitment to cycling we promised."
Government has committed more than £300 million to cycling investment between 2015-16 and 2020-21. This includes delivering in full the £114 million Cycle Ambition City scheme, with construction of segregated cycle lanes including 115 kilometres in Birmingham and 56 kilometres in Manchester.
ACS respond
Reacting to the announcement today, ACS chief executive James Lowman said: "We welcome the Chancellor's commitment to extending small business rate relief in 2016; this is a measure that helps businesses to the tune of over £1bn each year and is essential in giving local shops the opportunity to invest in their staff, property and services.
"We are however disappointed that no announcement has been made on the continuation of the business rates discount of £1,500 for high street retailers. We argued for the Government to increase this discount and if the Chancellor scraps it, it will hurt businesses coming to terms with increased wage costs and uncertain rates bills.
"We still have significant concerns about the devolution of rate setting powers to local authorities, given how little existing discretionary rate relief setting powers have been used to support businesses.
"We'll have to wait for the Budget in 2016 for more details on the Government's review of business rates. Businesses need certainty to be able to effectively plan for the future, and we urge the Chancellor to consult with businesses now as he develops these proposals."