The Budget: What do retailers need to know?

Why are we talking about it now?

Last week Chancellor George Osborne unveiled the Budget, which outlines how the country’s money will be spent in the coming year.

What measures were unveiled that will help retailers?

The Chancellor revealed another 1% cut on corporation tax - a levy on profits - which will reduce it to 20% from April 2015. This follows the 1% deduction scheduled for next year, which was unveiled in the last Autumn Statement.

BRC director-general Helen Dickinson said the cut was “excellent” news for retail. The Chancellor hopes it will make the UK more competitive because Britain will soon have the lowest corporation tax in the western world and should therefore attract more businesses.

Small companies won in the Budget because the new Employment Allowance will entitle firms to £2,000 a year towards their National Insurance Contributions bill. It will mean 450,000 small businesses will pay no jobs tax at all.

DIY retailers may benefit from new measures that will offer Government-backed mortgages to help people buy homes with a deposit of just 5% of the property value.

Were any measures introduced that will put more money into customers’ pockets?

There was good news for drivers as the Chancellor revealed he would scrap the fuel duty rise that had been planned for September. It will help ease the cost of transport for consumers.

Household budgets will also receive a boost as the tax-free earnings barrier has been lifted to £10,000. That means the typical basic-rate taxpayer will pay £705 less income tax a year from April 2014.

Was there anything significant that was left out?

In a blow to retailers, the Chancellor failed even to mention business rates, which are a huge burden to the industry.

The retail industry now faces paying an additional £175m in rates when the 2.6% increase comes into force in April.

Retail Week and the BRC have been lobbying the Government to freeze business rates this year to help retailers invest and grow.

Despite the Government’s snub, the fight to get a fairer business rates system for retailers will continue through the Retail Week and BRC Fair Rates for Retail Campaign.

The campaign will continue for the Government to calculate business rates using the annual inflation rate of CPI, rather than the more volatile September RPI rate.