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What Does Budget 2016 Mean for the High Street?

Ryan Willis

Following Chancellor, George Osborne’s Budget announcement earlier this month, many retailers argued that more could have been done to support the High Street. A certain amount of dissent is to be expected where the budget is concerned, but further reading into the 2016 Budget does paint a more positive picture where High Street retailers are concerned.

Stamp Duty Changes

In much the same way as Stamp Duty in the Buy to Let market has been overhauled, commercial property has also seen a dramatic change in Stamp Duty charges. The changes will see 90% of small businesses have their tax bill cut or stay the same.

To elaborate on the new structure, Stamp Duty will follow a band system, where certain thresholds will trigger certain percentages. Commercial Property will have a zero rate band on purchases up to £150,000, a 2% rate on the next £100,000, and a 5% top rate above £250,000. George Osborne gave the following example:

“If you buy a pub in the Midlands worth, say, £270,000, you would today
pay just over £8,000 in stamp duty. From tomorrow you will pay just £3,000.
It’s a big tax cut for small firms. All in a Budget that backs small business.”

Whilst the example does not specifically relate to the High Street, the same logic stands. The reform came into effect on Thursday 17th March and is expected to raise approximately £500m a year.

£7bn Tax Cut for Small Businesses

Whilst the Stamp Duty changes reflect a huge potential saving for the High Street, another important part of the budget was the news that 600,000 small businesses will not have to pay business rates. From April 2017, small business tax relief will come into effect. Businesses in premises with a rateable value of £12,000 and below will receive 100% relief, while firms with a rateable value between £12,000 and £15,000 will be given tapered relief. In addition, the threshold for the standard rate would rise from £18,000 to £51,000, which will take 250,000 smaller properties out of the higher rate.

All in all, these changes reflect a £7billion saving for small businesses across the UK, one which could play a large part in reviving the high street.

Whilst the effects of the budget will unfold, the future for high street retailers would appear to be positive. Should trading on the high street become a more affordable possibility, it will signal one of the best challenges in the fight against online retail. We’ll be watching the future of the high street very closely to see what long term effects budget 2016 has.

If you would like to discuss how Budget 2016 will affect the High Street any further, get in touch with the Nabco team today. You can call us on 01727 542 257 or use our contact form.

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