Not for the first time the latest budget is something of a Curate’s Egg as far as the UK’s kitchen and bathroom industries are concerned.
630,000 small businesses will pay no business rates at all from next year, as George Osbourne cuts business rates across the board. There will be a new threshold for small business rates, more than doubling from £6,000 to a maximum of £15,000.
Future business rates increases will be based on the consumer price index rather than the retail price index; this is intended to give more accurate rates bills for retailers and is good news for many of the smaller independent kitchen or bathroom specialist retailers. Small firms will also benefit from a cut to commercial stamp duty. Some 90 per cent will pay less, or be unaffected, although nine per cent of firms will pay more.
Shares in housebuilders took off after the chancellor delivered his Budget today, announcing plans to speed up investment plans in priority areas. But the property market is no longer the magic bullet of kitchen and bathroom business – apart from a feel-good confidence factor an increase in property values brings to home owners.
Gone are the days when a couple buying a home could arrange to borrow 100% (or even 110%) of the purchase price of a property and use their savings to buy a new kitchen or bathroom. Many of today’s new byers have to rely on the Bank of Mum & Dad just to get the deposit together.
It is equally hard to see how a dent in the Buy-to-Let market is going to help the property market either. The chancellor said the higher rate of Capital Gains Tax, which applies to capital gains on most assets, will fall to 20 per cent, from 28 per cent now, while the basic rate falling to 10 per cent, from 18 per cent before. But the move won’t help landlords, after Mr Osborne said capital gains on residential property and carried interest will be subjected to an eight percentage point surcharge – essentially leaving them at the original rate.
Capital Gains Tax applies to all residential properties except the main home, and it’s the second time landlords have been hit, after the Chancellor introduced a hike to stamp duty for landlords in last year’s Autumn Statement.
People living in rented accommodation rarely splash out on good kitchens or bathrooms as they don’t own the property and ironically the worse aspect of this year’s budget for the kitchen and bathroom markets could be the introduction of a new lifetime Isa aimed at savers under 40.
Chancellor George Osborne announced a new lifetime Isa in his Budget speech to help the under 40s who feel they have to make a choice between either saving for a retirement or saving for a property. Similar to the help-to-buy Isa, government will add £1 to every £4 a saver sets aside up to a limit of £4,000 worth of savings per year. However, unlike the help-to-buy Isa, young savers don’t have put the money towards their first home they keep it until they retire.
People in their 60’s today often invested in a home which they improved over the years by, for example, getting a new good-quality kitchen and/or bathroom. For a substantial number of people investing in their home was part of the pension plan. However if today’s ’20 to 40-somethings’ choose to rent a home and invest in a lifetime Isa instead ,that certainly will not be good news for the UK’s kitchen and bathroom markets.
It’s enough to drive a retailer to drink but if it does, keep an eye on the sugar content of your tipple. A new levy on the sugar drinks industry will come into effect in two years’ time. There will be two bands of tax assessed on the volume of the sugar-sweetened drinks companies produce or import. One band will be for total sugar content above five grams per 100 millilitres; a second, higher band for the most sugary drinks with more than eight grams per 100 millilitres.
Make that a mineral water please!