In what was a wider than ever trailed budget announcement with multiple pre-announcement ‘leaks’, there were still some surprises at yesterday’s lunchtime session from the Chancellor, with some more welcome than others.
Freezing personal tax thresholds until 2026:
Income tax, national insurance, and VAT will not rise short term.
The personal allowance thresholds for income tax will be frozen, then raised in line with CPI next year to £12,570 and £50,270 before staying at that rate until 2026.
By freezing tax allowances until 2026 the Chancellor looks to be sticking to the Conservative promise not to raise taxes as such and that’s positive for operators’ and customers’ cashflow.
However, with inflation and earnings growth, not increasing allowances will have a real impact on everyone’s net tax position and their income longer-term. We’ll take the short-term boost; we need that for our industry to get out of trouble.
Freeports – ‘Special economic zones with different rules to make it easier and cheaper to do business’ – will be located at 8 locations:
1. East Midlands Airport,
2. Felixstowe and Harwich,
3. the Humber region,
4. the Liverpool City region,
The Chancellor announced that the freeports will have “simpler planning, cheaper customs – with favourable tariffs, VAT or duties”, and lower taxes – with “tax breaks to encourage construction, private investment and job creation”.
They will also benefit a wide geographical area around them.
For Showmen with fairs in these areas, this could mean there may well be more spending money in the local economy from the boost these freeports will bring.
Alcohol and fuel duties frozen:
Duties on alcohol have been frozen for the second year in a row. This will help our adult customers have more money to spend with us, but equally may be a distraction for them, ie going to the pub instead of the fair.
Fuel duty is also frozen as was hoped for and expected. This will benefit everyone, from Showmen with fairs to move, advance billers in each town, and customers visiting us.
However, the increasing area of the LEZ / ULEZ in London and other towns & cities may counteract this.
The ‘cavalry are coming over the hill’ to assist Showmen though, with the separate confirmation (not announced by the Chancellor) that red diesel for use on-site (but not on the road) will continue to have the lower tax duty from April 2022.
This is reported separately and is a great win for everyone after strong lobbying by the Showmen’s Guild with its colleague associations and will be of fundamental assistance to Showmen.
Corporation tax rate rising:
The rise in Corporation Tax (an unusual move) to 25 per cent from 19 per cent in April 2023, is bigger than expected and will affect a minority of Showmen with larger businesses.
It is hoped the economy will be stronger by 2023, however, and as it is charged on profits struggling businesses will, by definition, be less affected.
VAT reduced rate extended for another six months:
The 5 per cent reduced rate of VAT extended for six months to September 30 will be of limited assistance to many Showmen who are not VAT registered.
For those who are VAT registered, including those with one-price ticketing operations or centralised token systems, this will be welcome.
The interim 12.5% for a further six months to April 2022 will be of limited assistance, although some may benefit depending on whether they are open for bonfire, Christmas and early season events.
However, all the other entertainment and hospitality venues will also have the same concession, competitively, though overall it will assist customers’ discretionary spend go further.
Doubling the contactless-payment legal limit to £100 is similarly of limited use with lower-stake charges at fairs.
The furlough scheme being extended until the end of September, with employees continuing to receive 80 per cent of their salary, will affect a minority of larger operators. It is hoped, in any case, that they will all be working by this time as more fairs reopen.
Of more use is the continued support for the self-employed Showmen through SEISS which will also continue until September, with the fourth grant providing three months of support at 80 per cent of average trading profits and a fifth round in the summer tapering off.
This will benefit some Showmen who may have a mixed operating schedule compared with a usual year. Many Showmen were ineligible for this grant in 2020, however.
Minimum wage rises to £8.91 per hour from April:
This (including all 23-year-old workers for the first time) just as fairs are re-opening, will be an extra cost to factor in for several Showmen, depending on the number of employees needed.
The flip side of this, as with all the measures, is that this same demographic, as customers, will have increased purchase power at fairs.
Universal Credit £20 uplift extended:
The £20 Universal Credit uplift is to be extended for another six months; this should help those Showmen affected most by being closed throughout last year, as well as customers to our events.
The jury is out on the possible practical benefit of the new super-deduction, beginning April 2021, cutting companies’ tax bill by 25p for every pound they invest in new equipment.
The Treasury calculates this as worth around £25 billion to UK companies over the two-year period the super-deduction will be in full effect.
What amounts to a super-scrappage scheme may be attractive to both the larger operators who wish to renew rides and attractions and to the limited manufacturer–operators, who could sell more new rides to others, in a finance-squeezed landscape.
Overall, there are many business recovery loans and other measures, including rates relief, as well as apprenticeships and other measures that are based around business premises.
Many of these are unobtainable or not relevant to Showmen operators, as the President of the Showmen’s Guild, Philip Paris, has previously noted in various government meetings.
Of greater importance to showmen than yesterday’s financial red-letter day, is 12th April. Hopefully, if things go well, this is when some of our fairs can start to reopen –then the real budgeting process begins.