Following last year’s “once-in-a-parliament reset”, businesses and individuals braced for another potentially disruptive Budget amid rumours that the Chancellor would again raise taxes, despite previously stating there would be “no more tax increases in this Parliament”.
The lead-up felt chaotic, with briefings that offered little substance, widespread speculation, and even a leak of the full OBR Report before the Chancellor had the chance to present it in Parliament. None of this helps business confidence, and it has certainly stalled decision-making over the past couple of months.
There’s a lot to cover, but we’ll focus on a few key elements that will impact our industry and our customers.
Lower Thames Crossing Confirmed
A commitment to the final tranche of public funding for the Lower Thames Crossing was a welcome announcement. Construction is expected to begin in 2026 and be completed by 2032. With London and the South-East accounting for around 40% of the UK economy and with London Gateway on track to become the UK’s largest container port by the end of this decade, the Lower Thames Crossing will deliver a long-needed improvement to the Essex and Kent road network. With The Finishing Line’s strategic location in Basildon, we’re well placed to benefit.
End of the £135 Low-value Import Exemption
Removing the exemption on customs duty for low-value imports will be a positive shift for UK retailers. From March 2029, customs duty will apply to these goods, helping close the price gap created by marketplaces such as Shein and Temu, and creating a fairer competitive landscape for our customers.
Fully Funded Apprenticeships for Under-25s
Fully funded apprenticeships for under-25s was another encouraging announcement. With both a significant skills gap and high youth unemployment in the UK, giving SMEs the ability to invest in workforce development and provide opportunities for young people is a welcome step.
However, several measures will raise concerns for SME’s, one being the increase in business rates for warehouses with a rateable value above £500,000. While supporting high-street retailers is important, doing so at the expense of the UK warehousing sector is a step in the wrong direction. The Chancellor referenced “online giants” in her announcement, but these changes will hit SME’s like us, as well as customers who rely on online sales.
Moreover, warehouses handle the stock sold on the high street, meaning that while high-street retailers may benefit from reduced business rates, they will instead face higher supply-chain costs. This is another inflationary policy that will increase pressure on UK businesses, leading to higher consumer prices and reduced investment.
The National Minimum Wage will rise above inflation from April 2026, adding further cost pressures for businesses.
Income tax rates remain unchanged, but thresholds have been frozen for a further three years to 2031. As wages rise with inflation, this effectively increases the tax burden. Many of our employees are already unhappy with how much they are taxed, and this freeze does nothing to ease the cost-of-living pressures on working people. It is likely to worsen the situation and could reduce consumer spending in the years ahead.
The cap on salary sacrifice schemes for pension contributions above £2,000, set to take effect from April 2029, will also lead to higher costs for businesses and affected employees. Most employees earning around £40k won’t be impacted, but higher earners will see increased costs. This feels counterintuitive given an ageing population; instead of encouraging people to build their personal pensions and reduce reliance on the state pension, the policy effectively increases national insurance contributions.
A 3p per-mile charge for electric vehicles from April 2028 was also announced. Whilst this was expected as revenues from fuel duties decline, this is likely to cause last-mile delivery costs to increase. The Chancellor didn’t really have a choice on this one, and everyone expected it, but couriers may introduce surcharges to offset the impact.
Overall, while there were some positive developments, this was not the pro-growth Budget businesses were hoping for. Many of the measures are inflationary and fail to address the structural challenges facing the UK economy, with 5% unemployment and 21% economic inactivity according to the ONS.
Increasing taxes and operational costs for small and medium-sized businesses is not the answer. The government should be reducing employment costs and easing burdens such as business rates, enabling SMEs to invest in people and infrastructure. This would ultimately boost productivity, increase tax receipts, and reduce welfare dependency.
SME’s are the backbone of the British economy. If the Chancellor wants to achieve the growth she has set as her top priority, she must back the businesses that will deliver it.
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