With a raft of tax hikes and cost increases announced in the government’s latest budget, the consensus seems to be that it’s a tough budget for business owners, with costs set to surge.
Here’s a summary from the British Retail Consortium (BRC) of the main announcements likely to impact florist retail businesses:
National Minimum Wage/National Living Wage: From April 2025, NLW will increase to £12.21 per hour and NMW for 18-20 year olds will increase to £10.00 per hour. The government is also increasing the minimum wages for Under 18s and Apprentices to £7.55 per hour.
National Insurance: The government is increasing the rate of employer National Insurance contributions (NICs) from 13.8% to 15% and reducing the per-employee threshold at which employers become liable to pay National Insurance (the Secondary Threshold) from 6 April 2025 to £5,000.
Employment Allowance: The government will increase the Employment Allowance from £5,000 to £10,5000 next year and remove the £100,000 eligibility threshold.
Business rates:
An intention to introduce permanently lower multipliers for retail, hospitality and leisure (RHL) properties with a rateable value (RV) under £500,000 from April 2026-27, funded via a higher multiplier on all properties with RV of £500,000 and above.
A business rates Discussion Paper has been published, setting out the government’s priority areas for reform and next steps, which include data transparency, shortening periods between revaluations, improvement relief, with an initial phase of engagement before Christmas 2024.
During the interim period, for 2025-26 the Small Business Multiplier will be frozen and eligible Retail, Hospitality and Leisure properties will receive 40% relief (down from 75%), subject to the total cash cap of £110,000 per business.
Corporation Tax: A Corporate Tax Roadmap has been published, confirming the government will cap the rate of Corporation Tax at 25% for the duration of the Parliament.
Fuel Duty: The government will freeze fuel duty rates for 2025- 26 and the 5p cut in fuel duty rates will be extended by 12 months. The planned inflationary increase for 2025- 26 will not take place.
Capital Allowances - Electric Vehicles: The government is extending 100% First Year Allowances for zero emission cars and EV charge points for a further year.
Packaging Reform: Reaffirmed the government’s commitment to move towards a zero-waste economy and implement the Collection and Packaging Reforms Programme.
Retail Crime: The core government grant for police forces will increase to support frontline policing and deliver 13,000 additional PCSOs to tackle neighbourhood policing. In her speech, the Chancellor said additional funding will help police tackle shoplifting and organised retail crime, adding she had listened to the BRC.
Leaders from across the retail sector have voiced their opinions and concerns about the latest budget announcements:
Helen Dickinson, Chief Executive of the BRC, said: “Retailers are counting the cost of today’s Budget. For a low margin industry, today's Budget will hit hard, with the odds now stacked firmly against growth and investment in the short term. These new costs also risk increasing the prices customers pay at the till.”
The Federation of Small Businesses (FSB) said: “The true test of today’s Budget will be whether small businesses can grow and end the economic stagnation in which the UK has been stuck. Many SMEs will struggle with the rises in employer national insurance on top of the substantial increases in the National Minimum Wage and the large cost implications from proposed employment law reforms, with potentially negative impacts on jobs, wages and prices”.
Chris Brook-Carter, CEO of retail industry charity Retail Trust said, “Increases to the national minimum wage and national living wage will support many people across the retail sector by giving them the pay raise they deserve. But we echo the concerns from some in the retail sector about the long-term impact of increased National Insurance Contributions on both employers and their staff.”
Andrew Goodacre, CEO of the British Independent Retailers Association said, “Small retailers, who have already endured years of challenging trading conditions, now face a perfect storm of crippling cost increases. Their business rates will more than double as relief drops from 75% to 40%, while they’re hit simultaneously with employer National Insurance rising to 15% and a lower threshold of £5,000, down from £9,100. Add to this the minimum wage increase and many of our members are telling us they simply cannot survive this onslaught.”
Michelle Buxton, REVO board member said, “Sadly the Chancellor’s announcement has made things worse for retail businesses with many reliant on the 75% business rates relief. With this now reduced to 40% and with minimum wage and national insurance contributions increasing while the multiplier remains static, or is set to increase, cost increasing will be painful.”
Shevaun Haviland, Director General of the British Chamber of Commerce, said: “This is a tough budget for business to swallow. While some protection for smaller firms is welcome, the increase in employer National Insurance Contributions will place a further cost burden on business. This, coupled with a 6.7% increase in the National Living Wage, means many firms will find it more challenging to invest and recruit. The Chancellor has looked to off-set the upfront hit on firms by outlining a longer-term framework to provide stability for the economy. Plans to raise infrastructure spending, sector-specific business rates relief and additional support for small business will take some of the sting out of the tax rises.”
Clearly there’s much concern about the timing and impact of this Autumn Budget:
Increasing business rates is regarded by many as a threat to the future of our high streets. Charging more to businesses with higher rateable values may punish small businesses as well; if larger stores are forced to close, footfall to high streets and town centres will be adversely affected.
Increased National Insurance contributions could reduce investment in shops and jobs. Salary increases may no longer be affordable and employee hours may have to be reduced. However, the increase in employment allowance for small businesses, from £5,000 to £10,500, should protect many small businesses from the jobs tax.
Increases to National Minimum Wage and National Living Wage were larger than expected and business owners are now facing increased costs from implementation of the Employment Rights Bill and National Insurance contributions. This will inevitably impact operating costs and growth plans.
If you’re concerned about the Budget impact on your business, now may be the time for a detailed review and assessment of how your currently operate, such as:
- Supplier review: cost, quality, service
- Product selection and quantity
- Ways of working: wastage, profit margin, staff costs etc
- Product offering: range, variety, delivery
- Operating costs: energy, insurance, banking, consumables.
It may just help to uncover savings you could make, new sales initiative or ways in which you could run your business more efficiently and effectively. They do say that necessity is the mother of invention but its looking like tough times ahead for many business owners.
