Tax relief tops Budget wish list for North East businesses

A business barometer has found an air of optimistic sweeping through North East firms ahead of the Budget announcement

Chancellor of the Exchequer George Osborne
Chancellor of the Exchequer George Osborne

A business barometer has found an air of optimism sweeping through North East firms ahead of the Budget announcement, with more than half pledging to boost headcount in the next 12 months.

County Durham-based business advisers and accountants Clive Owen & Co LLP carried out the survey among their clients to gauge the mood of SMEs in the region ahead of tomorrow’s announcement by Chancellor George Osborne.

The survey revealed more than 58% of businesses are looking to take on additional staff in the next year, while almost two thirds, 60%, said they were looking at increased planned capital expenditure. And almost 42% said they felt confident that this year’s Budget would stimulate further economic growth.

The survey, which was sent to more than 500 businesses in the North East and North Yorkshire and included those in IT, manufacturing, retail and construction, showed that 80% felt optimistic about their own industries.

Meanwhile companies across the North East have been finalising their wish lists, including clients of KPMG who surveyed board level executives at 161 medium sized businesses, asking them which single measure would help their organisations’ growth. “Putting more money in employee’s pockets” was the most popular response with more than one in five of respondents.

Looking at tax measures specifically, reducing the National Insurance Contribution (NIC) rate was the most popular measure that businesses wanted to hear, followed by an increase in the threshold for the 40% personal tax rate.

These measures were closely followed by a desire to see increased tax relief for investment in machinery, premises and technology.

Mick Thompson, office senior partner for KPMG in Newcastle, said: “Although businesses are regaining their confidence as the economy grows, our research shows that they would like further encouragement to invest in plant and machinery to support future growth.

“Business is also acutely aware that if people feel that they have more money in their pockets, this will help to keep economic growth on track.”

Newcastle-based Homegroup, of the UK’s largest developers of affordable homes, has called on Chancellor George Osborne to deliver a seismic shift in housing aspirations.

After the government announced plans for a new garden city at Ebbsfleet, the company said a message needs to be issued showing commitment to provide ‘homes for all’ when it sets out its spending agenda.

A pile of sterling coins in the shape of the United Kingdom and Ireland
A pile of sterling coins in the shape of the United Kingdom and Ireland
 

Chief executive Mark Henderson, chief executive, said: “The Government has focused its efforts on support individuals to get on to the housing ladder with some success. It now needs to demonstrate its intent to deliver affordable homes for all, irrespective of ownership.

Jeremy Middleton, chief executive officer of investment firm Middleton Enterprises is urging George Osborne to encourage investors to look towards social enterprises, by setting tax relief incentives.

He said: “This would be likely to increase the level of investment in social enterprises, which would have a particularly dramatic impact in the North East, where there are thousands of social enterprises which currently find it difficult to raise funds.

“Tax incentives, along with new sources of funds from sources including the Northern Rock Foundation, could completely change the landscape and facilitate the growth of business with a social conscience, helping wider economic growth in companies which make a real, sustainable and tangible difference to people’s lives.”

Another hot topic is business rates.

Chartered surveyors at Sanderson Weatherall are calling for a re-think on rates, as well as an increase in stamp duty.

Richard Farr, a partner at the firm, which has offices in Newcastle and on Teesside, said: “The Government decision to delay the re-basing of business rates from 2015 to 2017 is going to hit many smaller companies who will have to pay out on the basis of values set at a peak time.

“George Osborne can do a lot of good by reversing this decision at the Budget.

“Additionally, with the widespread economic benefits that increased house building can bring, increasing the threshold for Stamp Duty would assist affordability in the market, helping buyers and builders alike.”

Tax relief for small businesses is top of the wish list for Mike Odysseas, managing director of Stockton-based Odyssey Systems.

He said: “Small businesses are still shouldering too heavy a tax burden. It was great that the Government decided to extend the small business rate relief scheme for another year, but this simply isn’t enough to nurture the green shoots of recovery which are now apparent.

“To enable businesses to maximise growth, I would like to see an indefinite extension of the relief scheme, which would alleviate financial strain and facilitate economic progression.

“The corporation tax cuts made so far have mainly benefitted the 80,000 larger businesses in the UK, rather than the 1.5m SMEs which make up the bulk of the economy.”

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