In advance of the Chancellor’s upcoming Budget, we asked each of our sector teams for the things they’d like to see to support the UK businesses. Here follows the wish list for the Wholesale & Retail sector.
2017 has not been a good year for retailers, with non-food sales only increasing my 0.2% in the year to October, compared with 2.4% for the same period in 2016.
A lot of high street retailers are reporting a significant downward turn in their results which is starting to result in some shop closures from the larger retailers. Never a good sign.
The chancellor needs to respond to the poor performance of the sector as a whole and deliver a budget that reduces the costs of living and encourages consumers to begin spending again.
Below we provide a wish list of what we would like the Chancellor to provide to the retail sector in order to provide a timely boost to the whole sector, just before its busiest time of year.
A Business Rates review was carried out in April this year with many retailers across the UK losing out as the rateable value of their premises increased. Although the fight has been lost in trying to have the rateable values reviewed fairly, HMRC does have a second opportunity to assist retailers by scrapping a Business Rate rise in April 2018. The planned rise would see retailers faced with an additional £270m Rates bill on top of the significant increases already received this year.
Reduce cost of living
A freeze on all Income Tax & NI rates coupled together with the increase in the speed at which the personal allowance rises, will assist with the cost of living and potentially help increase consumer confidence in spending.
With the proposed £1,000 micro-entrepreneurs allowance being scrapped immediately after being introduced, a reconsideration from the government here is likely to have a large impact on many homeworkers who sell via ‘sharing economy’ websites. Although the £1,000 is relatively low, given the growing popularity of the ecommerce sector, and an increased limit would likely benefit more people, getting the bill agreed and included in the Finance Act should take priority here.
REDUCTION IN IMPORT DUTY
The cost of importing goods has remained significantly high in 2017 due to the low average value of the pound has remained constant in the previous 12 months.
Already operating with low margins, many retailers are unable to absorb Forex-related cost increases, and now as they are not seen as being temporary, they are being passed on to the customer. To take the pressure off the sector, the Chancellor should consider reducing import duty or providing an import credit for retailers. This would benefit both the retailer and the consumer; as prices could be reduce again to become more affordable.
INCREASE NATIONAL INSURANCE (NI) ALLOWANCES
The retail sector has already been impacted by the National Living Wage, especially since the Brexit vote and the Apprenticeship Levy is now fully in place and bringing in more cost to retailers. To alleviate these employment-related cost pressures, the Chancellor should consider increasing employers’ NI allowances.
Increase in the VAT threshold
Although a reduction in VAT rates would be preferable he as a temporary measure to help boost spending, a permanent increase in the VAT threshold may assist retailer’s to grow, as currently if they are close to the current turnover threshold of £85,000, they may be discouraged from growing and having to potentially charge an extra 20 percent.
Get more input on the Autumn Budget 2017 implications for the UK Retail sector by speaking to our sector team.
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