With businesses looking to reduce uncertainty and strengthen their bottom-line in a post-lockdown world with increased supply-chain pressures and rising costs, owner/directors of SMEs across the country will be carefully reviewing the Autumn Budget Statement to establish whether the Chancellor has, indeed, started tackling those immediate concerns sufficiently.
Whilst many hoped the government would have been bolder in their efforts to boost the economy, some of the Chancellor’s measures certainly appear to have the potential of positively impacting businesses with commercial property portfolios.
There is the introduction of a new revaluation cycle from 2023 which the government hopes will make the business rates system fairer and timelier.
Relief on business rates will encourage firms to invest in the installation of green technologies like solar panels.
And, most significantly, there will be a twelve month rates holiday on improvements to commercial property in 2023.
Speaking at the despatch box, Rishi Sunak stated, “From 2023, every single business will be able to make property improvements – and, for 12 months, pay no extra business rates.”
This means that firms won’t have to pay higher business rates when they make improvements to their property, thus encouraging them to do so as employees return to their jobs.
The Chancellor’s statement also outlined how £3.9bn will be put aside to help industry ‘decarbonize buildings’ over the next 4 years whilst, from 2023, there will be tax exemptions against eligible equipment and plant that are used for onsite, ‘green energy’ storage and generation alongside 100% relief for the creation of ‘heat networks’.
All positive so far.
However, many consider the decision to raise the living wage by 6.6% as creating an additional cost-burden on SMEs already struggling with rising costs for material, labour and energy.
Additionally, with confirmation that there will be a 4% ‘Cladding’ Tax levied on ‘property developers’ (with annual profits over £25m) the challenge that CFO’s across the country will now face, is how best to move forward whilst balancing the impact of what may seem like conflicting budget measures.
Do they press ahead with the maintenance and upkeep of their portfolios to take advantage of the 12-month relief in 2023 or do they, instead, seek to minimise the increased taxation incumbent with the subsequent increase in value of their assets that will come as a result of those improvements? Could there be a hit to come in 2024?
It is this imbalance and complexity that adds to confusion within the industry and creates uncertainty when it is least needed.
Sources: Investment Week | Building
ProjectSure are proposing the establishment of a forum in which CFO’s and Directors can share best practices, discuss challenges and explore effective routes to success for SMEs with property portfolios.
If you would like to join such a forum or discuss the impact of the budget statement on your property portfolio management, please contact Bankie Williams via email.