White van man was among those handed a much-needed boost after the Chancellor raised the level at which businesses have to pay VAT.
The threshold was raised from £85,000 in turnover to £90,000, giving everyone from painters and decorators to florists and tea shop owners across the UK a shot in the arm.
It was the first rise for seven years and will benefit around 28,000 businesses, according to the Treasury.
The freeze in recent years has forced some to increase prices to account for the extra tax burden, while others have actively avoided the threshold altogether – deliberately stunting their growth.
The plan to raise the threshold for small businesses by £5,000 will ‘cut taxes and help them grow’, Jeremy Hunt said in the Budget yesterday.
Business boost: The level at which businesses have to pay VAT was raised from £85,000 in turnover to £90,000
‘The Government recognises that VAT can be a burden for some small businesses, and will therefore increase the VAT registration threshold to £90,000,’ the Treasury added.
The change will come in from April 1.
But some business leaders think the plans do not go far enough, with many hoping for a rise in the turnover to £100,000.
Owen Burn, at wealth manager Evelyn Partners, warned: ‘Businesses may opt to manage turnover to remain under the threshold. It is unclear what level of growth this marginal rise will deliver for those in and around the threshold.’
The plan was announced alongside a number of measures to help businesses, most notably the Growth Guarantee Scheme, which will run until the end of March 2026.
The scheme offers a 70 per cent Government guarantee on loans to small and medium businesses of up to £2million in Great Britain, and £1million in Northern Ireland.
At the same time, Hunt also announced another cut to self-employed National Insurance contributions, which will fall from 8p to 6p from April, and a commitment to extend full expensing to leasing plant and machinery equipment.
However businesses were left unimpressed, dubbing it the ‘unremarkable Budget for business’. Many wanted to see the issue of staff shortages addressed as well as plans to improve training for workers.
The Chancellor unveiled a 2p cut in National Insurance to try to attract more back to the workplace but others wanted Hunt to address problems around the long-term sick.
Roger Barker, director at the Institute of Directors, said: ‘What is the Government’s plan to encourage the long-term sick back to work?
‘That is the major issue for every business that so far no one has an answer to.’
