The Co-Founders Notebook - Rachel Reeves will not defeat us
It’s the eve of the much-anticipated Budget of 2025, with everyone holding their breath and hoping the cost of additional taxes isn’t as bad as what has been documented across the media over the past month.
Leak after leak after leak has been made, some intentionally to test the appetite of the markets and electorate, and some that feel unintentionally. But I’m struggling to recall a more chaotic lead up to a budget in my lifetime.
With record withdrawals from pension pots due to rumblings around the reduction in the 25% tax-free lump sum, currently at £268,275, could end up costing pensioners and those nearing retirement thousands. This has since been ruled out, however the damage for some has already been done.
We are now staring down the barrel of a £2,000 annual cap to the salary sacrifice scheme meaning any pension contributions above that level would attract employee and employer National Insurance being charged. Making it more expensive to save into a pension for both.
This doesn’t sit well with me. Businesses over a certain size have already been hit with higher taxes on employment by increasing the Employers National Insurance rate to 15% in the last budget. This not only adds to the ever-increasing tax burden faced by businesses but will inevitably have a detrimental impact on the amount saved into pensions. Not great considering we are heading into a funding crisis for people’s retirement.
Unemployment at record levels and vacancies at their lowest, who is really surprised? When you keep putting the price of something up, there comes a tipping point when people stop buying. We are at that tipping point. Businesses are recruiting less. Add an additional cost to this and it doesn’t take a genius to work out what might happen.
A nation of shopkeepers, that’s what Napoleon once called us. And I believe that’s what we are, it’s just becoming increasingly harder and less fulfilling. Entrepreneurs are risk takers, create jobs, and for this should be rewarded, praised and supported throughout. Even the reward at the end when the business is finally sold has been reduced. This once stood at 10% on the first £10m under the entrepreneurs relief scheme. Since then, this has been re-branded and is now the Business Asset Disposal Relief (BADR) scheme, which will soon increase to 18% on the first £1m.
This Government stood on a manifesto which promised “Growth, Growth, Growth!”, but sadly everything I have seen to date has delivered the opposite. And my fear is it will only get worse.
At Welf we see first hand the struggles faced by business owners, at every stage of their journey. And no matter what Rachel Reeves throws at us tomorrow, our drive, our vision and our commitment will carry us forward.
Until next time,
Paul – One half of Welf
