22. What Does The Budget Mean For You As a Business Owner

In this special episode of The KBB Unstoppable Business Owner Podcast, host Kevin D Bannister is joined by three influential figures from the kitchen and bathroom sector to break down the recent UK budget from the new Labour government. Kevin is joined by:

• Tom Reynolds – CEO, Bathroom Manufacturers Association (BMA)
• Richard Hibbert – Chairman, Kitchen Bathroom Bedroom Specialists Association (KBSA)
• Michael Costain – Managing Director, Installer Show, Lyrical Communications

Together, we discuss how the budget’s policies will affect business owners in the KBB and home improvement industries, offering insights into tax changes, investments, and labour market shifts. We dig into the specifics of how these changes could impact your business, while also providing advice on how to navigate the shifting economic landscape.

This episode will provide you as a business owner with some of the important facts but also the insights into what the budget actually means to you.

00:00 Introduction

01:00 What is the Autumn Budget?

02:00 Key Budget Measures Affecting Businesses 

• Business Rates Relief
• Corporation Tax
• Capital Gains Tax
• National Insurance Contributions & Employment Allowance

07:00 Industry Expert Discussion: Budget Impact on KBB Businesses

19:00 Opportunities & Challenges Poised by the Budget

24:00 Actionable Advice for Business Owners

25:00 Conclusion

The KBB Unstoppable Business Owner podcast is sponsored by KBN - Kitchens & Bathrooms News THE business magazine for kitchen and bathroom professionals.

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Transcript

Welcome to the KBB Unstoppable Business Owner podcast, sponsored by KBN Kitchens and Bathrooms News, the business magazine for kitchen and bathroom professionals. This podcast is dedicated to KBB and home improvement business owners with a mission to help you grow your business and achieve unstoppable wealth freedom.

Now, let me introduce you to your host, Kevin D. Bannister.

Kevin D Bannister: Welcome back to the KBB Unstoppable business owner podcast. It's the final episode of season two, but it's going to be a good one because today we're diving into the autumn budget. We're going to break down what it means to you as a business owner and later I've got some guests to come on that are going to give their views on the budget and how this will impact business.

First, I'm I have to say a huge thanks to KBN Kitchens and Bathroom News for sponsoring this season of the podcast. If you haven't checked them out already, they are the business magazine for the kitchen and bathroom [00:01:00] professionals. What exactly is the autumn budget? the Chancellor presents this annual report to outline the financial policies for the upcoming year. It's obviously the roadmap of how the government plans to manage the economy, setting those fiscal rules and the tax rates and their funding priorities. So today we're going to unpack the budget's main takeaways and focus on the measures that directly impact you as a business owner. Before we dig in, let's just set the scene. The UK economy has faced its fair share of challenges. High inflation, the cost of and that ongoing need for economic recovery.

This budget introduces new fiscal rules aimed to stabilize the economy. These rules focus on balancing the budget and reducing the net debt, which The government hopes will bring about more of a predictable environment for business owners The goal is long term [00:02:00] growth with a sustainable fiscal approach.

The government is focusing on investing in both the public and the private sector with initiatives for infrastructure, technology, and workforce development. By 2025, they aim to see a steady growth with measures to support business sustainability. So let's get into what matters most to you as a business owner, the specific measures directly affecting you. the first is business rates.

Now the business rate relief. for a retail business, as well as a hospitality or leisure business, there is some good news. The government has frozen the small business multiplier and is also providing the 40 percent relief on rates up to 110, 000 as a The current relief was 75%, but this was expected to end at the end of this financial year. So there is at some relief. relief going forward for the next year. The next thing is looking at corporation tax. They have [00:03:00] confirmed that they've capped the rate of corporation tax at 25 percent for the duration of this parliament, which at least offers some much needed stability for business owners.

When it comes to tax planning, this cap means that you will have a clearer view of your tax obligations when planning for future investments. And the next point is that capital gains rates are going to be increasing from April 2025. The lower rate will move from 10 percent to 18 percent and the higher rate will move from 20 percent to 24%.

There specific things on residentials and things like that, but these are the main rates that are changing. They've done a phased approach with the idea of giving business owners time to adjust. but it is crucial to start reviewing your assets planning now if you're considering selling any of these. Now, Many of you still refer to this as Entrepreneur's Relief, but this has been replaced by something called the Business Asset Disposal Relief, or the [00:04:00] BADAR. While both reliefs offer the reduced capital gains tax on a sale of a business.

The new relief has a significantly lower lifetime limit of 1 million compared to the previous was 10 million. The budget has confirmed that there's no change to these limits. So, for the foreseeable we are expecting things to continue as they are. One of the key changes affecting businesses though is the increase in employer national insurance contributions. This is going to be rising by 1. 2 percent to 15 percent starting in April 2025. with this increase though, they are going to be lowering the threshold which employers start to pay National Insurance from 9, 100 to 5, 000 per employee. So, in essence, if you're paying someone that is earning over 5, 000, you're going to be paying National Insurance from that point.

Now, there's [00:05:00] no real effect to them as an employee. Employees rates are staying the same. It's just you as an employer that these will make changes So for small businesses this will in most situations result in some higher payroll costs While there is this increase though, the government has also raised the employment allowance. Now, this currently is 5, 000 and they are upping this to 10, 500 to offset some of these costs for small businesses. So, to give you an idea of If you are already utilizing the employment allowance, which the majority of businesses should be, if you were to take on a new staff member at, say, a gross salary cost of 40, you would expect an extra cost due to this increase of around 985 pounds each year. I say the majority of businesses would be claiming this, but I still [00:06:00] come across a lot of businesses not claiming this allowance. So if you do your own payroll or you're unsure if you are claiming this, please reach out and I will point you in the right direction to make sure you are claiming this.

Next. Let's catch up with some of the industry experts and get their views on how the budget will affect you 

Hi guys, thanks for joining me. If you just want to introduce yourself just so that everybody can know who you are

Michael Costain: Yeah, I, yeah, I'm Michael Stone, I'm the Managing Director at Liverpool Communications. We run the, installer show and of media in the kitchen and bathroom space.

Richard Hibbert: Afternoon, Richard Hibbert, Managing Director of the KSL Kitchens, Bedrooms, Bathrooms and Subway and Chair of the KBSA.

Tom: So, Tom Reynolds, Chief Executive of the Bathroom Manufacturers Association.

Kevin D Bannister: brilliant, well, thanks for coming on the podcast it's always good to have people on that can express their views in these kind of things so What is the from [00:07:00] from what you've seen of the budget what's your gut reaction? From a well from your business and everybody else that you deal with

Michael Costain: Well, go first on that one. I suppose from, from our business so the N. I. increase will have an impact. I think from a from an industry perspective, obviously for bigger businesses, the N. I. increase will, you know, will affect everyone. It sounds like, and I don't know the details, so. But it sounds like there are, areas that small, small to medium sized businesses won't be affected as much from the N. I. increase. The positives are investment. So in housing, schools and the like. and, and I suppose if you're, you know, if you're in, in, connected to transport, then, you know, the, there was a freezing on the, the Duty as well. So, a bit of give and take, I suppose, is the, is the very basic appraisal from my side.

Kevin D Bannister: Yeah, richard

Richard Hibbert: Yeah, [00:08:00] probably the same. I think I said before that I've never known a government to come in and be so negative. About taking over. And I think it was a bit like the, when we ticked over to 2000, everything was going to stop by what they said in the budget. But it's, it's been a lot. More and probably what they wanted a lot more relaxed than maybe we thought it was going to be Yeah, the national insurance Probably doesn't really affect me because of the allowances for small businesses I can't quite make the calculation yet, but it probably won't affect us with the increase in that side I think it's going to affect I was talking to some big manufacturers yesterday.

I think it's going to affect possibly prices because You the, the minimum wage rise in a ripple effect through employment of, even if you're not on minimum wage, you're going to look for that pay rise as well to be on par with your, your colleagues. And so no doubt with the national insurance on that as well, but you're going to it's going to be price rises in, in the cost of kitchens and things like that in, [00:09:00] in UK and it's going to affect the bigger businesses, but yeah, it's not been so bad.

And, yeah, with the increased investment, that should be a, yeah, a good thing.

Tom: Yeah, well, from what I can tell from what Richard and Mike have said, they've kind of given a mixed picture and I think I'm probably going to continue with the theme. So, for us, it was a budget of both challenges and opportunities, challenges in respect of the wage bill. clearly the big eye catching announcement was around national insurance.

And the figure that we've arrived at along with a lot of other commentators is that it's going to cost just over six to 600 per employee per year for many businesses, but as has rightly been pointed out the brunt of that will be avoided by SMEs. Because of the, the almost doubling of the allowance for small employers, the living wage increase of of nearly 7 percent is obviously going to be a big

[00:10:00] increase in the wage bill for for many companies in the manufacturing sector. And. knock on effect on to try and maintain differentials through the, the, the the, the employment structure is going to be really, really challenging. So, yeah, the, the, the increased costs that businesses are going to face is going to be a challenge, but that, that, that is almost offset

really by the, the opportunities that are there in this budget. So, you know, that the investment piece is obviously huge, especially around the public sector. So those

Into housing in different including

500 million into affordable housing. You know, that that presents a great opportunity for for the sector, but I think that the biggest opportunity comes from. a prolonged period of stability and and sustained growth. Now, obviously, whether that that aim is is delivered remains to be seen, but for sure that is something which business of all businesses of [00:11:00] all kinds have been craving for, for several years.

And by the way that the market seems to have reacted to the budget, which is brilliant, Barely at all. That suggests that the immediate, aspiration for stability has been achieved.

So, let's wait and see if if our best hopes are realized. 

Kevin D Bannister: 2%, the threshold is it's just over 9k and they've reduced that to that was the, the, the big bit. Obviously I'm quite a numbers person. So actually if you're, if a business's wage bill is around to 75k, you're actually slightly better off because you would have been [00:12:00] paying. More ni than what you would now. But I think it's like you say it's that thing When you if you want to take on an extra person now, there is that extra cost that you've got to factor in I think really I think that's the big that's the biggest thing for obviously businesses Isn't it really in terms of everything's sort of come about I think

Michael Costain: Yeah, I think Thomas point, you know, it was, it was, is an important one in, in, in that, in that stability and the sort of seemingly a sensible approach whatever anyone's political, years. So it, because I suppose because there were, there wasn't too many shocks, major shocks. It does. I would certainly agree. It feels like, yeah, business as usual and let's crack on sort of thing. And there's, there's hopefully nothing that is going to sort of change the direction of travel for the next few years. Obviously that's, you know, the hope, but, yeah, it [00:13:00] did feel like a sensible start.

Tom: I think that the combined increase in living wage and I, and also the employment rights stuff, which is coming in, which isn't a budget measure, but it is a factor will probably all combined to make businesses just be a little bit more cautious about taking people on

Richard Hibbert: Okay. So, yeah,

Tom: near full employment anyway.

So unless those measures kick in quickly to bring people back into the labor market, that's probably no bad thing anyway. And, and it might just lead to businesses becoming more productive too. So yeah, I think it's a reasonable expectation that people are going to be a little bit more tentative when considering hiring now.

Kevin D Bannister: I think, I think that's the thing from it is, it's just that extra added bit, isn't it really where you've just got to actually think, to be honest, a lot of the times I say people aren't necessarily planning for the NI bill in the first place in [00:14:00] the smaller businesses. But yeah, I was glad that they upped the allowance.

I think for me that it does at least cover off

Richard Hibbert: small businesses do get the brunt of a lot of it with like the fact that, you know, we, we pay a lot of the corporation tax that a lot of the big boys try to avoid and you know, Britain has always been sort of built on the SMEs and so it's nice, it's nice that they've made sure we're, we're sort of a little bit protected on that one, sure.

Kevin D Bannister: Yeah, I did. To be fair with the corporation tax, what was actually interesting with that is that they said they wouldn't raise it above 25%. They didn't say we aren't, we, we, we could get rid of the 19%.

Richard Hibbert: Yeah, yeah, I'm waiting, waiting for that.

Kevin D Bannister: But yeah, no, definitely. I think, and like, I think you you're right. Is in. It had, there is at least some stability we kind of, cause I think with what happened with the election, we were all waiting for the election to be over to kind of get back

Sort of normality. And then, and then all of [00:15:00] this sort of started coming up. we're all going to, like you say, in the, in the year 2000, but,

This has come and actually it's not drastically, on it. There's not lots of unexpected things. I suppose it's the way it was. It was a very labor budget, but there are Newman there's give and take isn't there.

Richard Hibbert: Brits, Brits are happy if they know where they're going to be honest with. We don't stay down for too long, but other countries can stay in recessions and things for ages because they just get in almost a depressive state in the UK. We kind of get a few weeks down the line. I'm like, So that, you know, we want that kitchen, we're going to get that kitchen, even if I have to sell a kidney, I'm going to have it, you know, it gets to that stage and we're, we're quite resilient in the UK, so, 

Tom: kitchens cost, Richard,

Richard Hibbert: it's how much my kidneys cost as well, you know, but yeah, yeah.

But yeah, we are a resilient bunch and, I think, I think being built on SMEs as well is [00:16:00] great because then we are resilient and individual and flexible. So it's good. Nothing from our conference. There's a lot of positivity from from the independence and the manufacturers that went there for next year.

So, I don't think this is really bump the road that we're, we're going to stop that. I think it will carry on.

Tom: does feel like a bit of a turning point, doesn't it? In the, you know, your earlier point, Richard, that it's been quite a downplayed economy for the last three months in the run up to the budget, and that there's been a certain element of doom, expected in the budget, which hasn't materialized. And, you know, you wonder whether You know, the trailing that the politicians have been given today in the budget and some of the commentary around it is that their intention isn't to kind of come back to tax rises and the future, and that, you know, to quote Yass, the only way is up from here. 

Michael Costain: for the kids, Tom. [00:17:00] That's one for the kids.

Kevin D Bannister: To be fair, actually, when they were talking about the budget after it happened on the news, one of the big points that was made is that every time there is an election, the first budget taxes go up. Like, it doesn't matter in government, they go up, and then they start coming down near the end of

Richard Hibbert: Yeah,

Michael Costain: From a, from a, from a manufacturer, Tom, you'll know this better than, most. From a manufacturer's point of view, I mean, the sort of, noises is that the RMI, sort of, repair maintenance part of the market has been where The growth or stability is as come

if we are sort of collectively saying that we think that that is likely to continue with the, with the added investment in social housing, schools, hospitals, from manufacturer's point of view, does this Does this provide much more opportunity than you, do you think?

Sorry, Kevin, I shouldn't be asking questions, should I? 

Kevin D Bannister: [00:18:00] We will take it wherever it goes.

Michael Costain: You know, I mean, does that give

further hope from a manufacturer's point of view, don't you think? 

Tom: rates. Then that set subsector will hopefully,

, pick up pretty shortly afterwards, just, just organically by, by, by virtue of the underlying economics, and then the other segments that I've talked about in healthcare and public sector and affordable housing, everything, then we just talk. Really talking about a larger market than than we were facing prior to the budget day.

So yeah, yeah. I mean, that, that, that's all good.

Kevin D Bannister: I think that all the way as such, they've sort of said that [00:19:00] they are expecting inflation to peak next year at 2. 6%. And then that will drop practically where it was going to drop anyway, if we carried on on the same sort of basis, and I think they've said that they, they, I feel that interest rates may be held back.

They, where they are a little bit longer possibly, but obviously they're all kind of assumptions really, aren't they? But I think at least shows us that there's that consistency

Tom: I mean, what, what isn't covered in the OBR forecasts and, and which I'm very conscious of are things way beyond the control of government, like. What America does next week and therefore what the American administration does around kind of trade tariffs and so on and all the macroeconomic effects that they they have to completely kind of upend all plans, really so Yeah, I think fundamentally it's a good budget, but where the world economy goes next [00:20:00] is perhaps even more telling.

Kevin D Bannister: Yeah, definitely

Richard Hibbert: It was interesting talking yesterday to a a guy that covered Europe for a brand who's sort of head of Europe and basically all of the European heads go into him. And he said, Europe is struggling. England are actually one of their best markets, you know, so it shows that we're not, we're As bad as we think we are and talking to a lot of the German manufacturers with obviously they're rough and, all the war and everything that pursues canal issues to have in, I think containers were 2000 a unit and now they're 6000 if you lock it in, but 8000 if you don't, so all that's going up, so there's a lot more pressures than, than really our budget at the day, because manufacturing is a lot broader for our industry, and some are up to 40 percent down.

So, we're almost a little bit say lucky, but we're almost bucking the trend a little bit.

Kevin D Bannister: is it so I suppose, is there anything that you think that people need to be [00:21:00] looking to be careful about or on the same side, that I should encourage you would encourage them to do

Richard Hibbert: kitchens and bathrooms, definitely.

Tom: go out and buy a bathroom. Yeah,

Richard Hibbert: Yeah. I think we've talked about opportunities next year. I think a lot of people I've spoken to and, you know, my sister's put a lot of money away for my dad because bank, a lot of banks offered some really good rates up until January. And there's a lot of talk about two quick reductions in interest rates come January, February.

And so there is going to be money, you know, you've made a bit of money and your interest rates have dropped come January, February, and that may stimulate a bit of them. Purchasing it from, from sort of January, February onwards. And some people I've talked to haven't put a huge amount away. But they've almost got enough for a bathroom in the interest, which is, which is amazing in under a year, which we haven't seen for obviously years with the the interest rates where they are.

So, that could stimulate a lot. I think there is a good amount of [00:22:00] opportunities, although my members and my business aren't in the opportunities that they sort of presented today aren't really part of what we do, but the knock on effect Is always good and obviously if it can stimulate housing from the bottom up, but it's, it's not a bad thing.

So I think there's a lot of opportunities and yeah, I need to take it.

Tom: my only concern would be, the speed of the uplift,

if you like, and I wouldn't want to see as we have experienced in the not too distant past and overheating where you know, supply can't keep up with demand. Yeah. And that is a concern. I think a lot of lessons were learned in that post COVID uplift in the economy, in terms of vulnerabilities in the supply chain and the effect of kind of global shipping on our sector and so on.

So I think those lessons have been learned, but that will be something that will worry me. I [00:23:00] don't think it will be the case. I think it will be a slow recovery, a slow recovery. Slow is pejorative, but a managed recovery

in demand.

Richard Hibbert: People are in Christmas mode as well now, aren't they? So it's like almost, there will be some people going out buying kitchens and bathrooms, but almost people will be going, Oh, Christmas is coming up, you know, it's like, so, 

Michael Costain: Yeah,

you're right, I think there's been a lot, there has been a lot All levels in, in sort of earnings have been looking for this budget to happen as we've all said, you're right, you know, Christmas is coming and that will shift the attention, but hopefully it will unlock some demand across the industry. A whole load of different levels just because people have been waiting for this to happen. So, yeah and then hope, yeah, hopefully we'll see a a slightly better quarter one. But as Tom said, who knows what's going to happen over the other side of, the pond. 

Kevin D Bannister: No, definitely. Definitely. Yeah. And when I think when me and Richard caught up before [00:24:00] we was, we were saying about kind of the order books and everything, it was kind of like, there's still loads of orders. It's just kind of, taking a lot longer to kind of basically say, yes, let's go ahead. Because of events like the budget and the election and everything else that goes with We, we haven't been very lucky after COVID have we? 

Richard Hibbert: Not red lights.

Kevin D Bannister: we are resilient as business owners. yeah, I think, I think the budget overall was, it is a mix, but I think it's taking the opportunities out of, out of the budget as opposed to the negatives in a And we've all got a penny off a pint.

So 

Michael Costain: We've got a, our pin and governments of money off private jet levy. So we're winner. 

Tom: the anticipation of the budget

was probably worse than the budget,

Kevin D Bannister: Yeah,

Richard Hibbert: Yeah.

Tom: the fact that it's happened now is just the best thing.

Kevin D Bannister: definitely. right. Well, we'll [00:25:00] leave it there guys So thanks for all coming on.

Tom: Kevin. 

Kevin D Bannister: Brilliant. Thanks again guys. appreciate it uh, for your input. 

Tom: I'll see you chaps. 



Kevin D Bannister: Okay, before we wrap up, let's just get into some actionable advice for you as the business owner. First, I want you to check your eligibility for rates relief. already getting any rates relief and you are working in retail, please check this because you should be getting them. I do come across a lot of people that are paying higher rates than they should be. And nine times out of 10, it's just simple phone call with, with the local authority. Make sure you are claiming your employment allowance. This is something that essentially you agree when the pay run is run. So. If someone hasn't been, it is a case of ticking a box. If someone isn't ticking that box, you're not claiming it.You do need to make sure you do qualify. business, but the majority of small businesses should be able to claim this. These are direct ways that you can reduce some costs. [00:26:00] Then you need to be looking at tax planning. So especially if you are looking to sell any of your assets or your business in the next few years, it's vital that you look at this now. because the rates will, as the we go further through, there may be additional changes. So definitely start looking at this as soon as possible.

And finally given the cap of corporation tax at 25%, use this stability to make that long term financial forecast. And then review your tax planning strategy. Especially if you're looking to sell your business or any of your assets in the next few years And finally given that the cap on corporation tax At 25 is in place for the term of parliament Use this to make those long term financial forecasts

from the discussions with the guests on this episode I think the big takeaway was the british business owners are resilient And we should use this and the stability that the budget looks to bring to move our businesses forward I [00:27:00] really appreciate everyone that listens to the podcast free to send me a message on linkedin or instagram and let me know If you find it useful, it's always great to hear from listeners and a big thanks to KBN, the sponsors of the podcast for this season.

I'm Kevin D. Bannister, and you've been listening to the KBB Unstoppable Business Owner Podcast. 

Thank you for listening to the KBB Unstoppable Business Owner podcast, sponsored by KBN Kitchens and Bathrooms News, the business magazine for kitchen and bathroom professionals. If you've enjoyed today's episode, don't forget to follow, subscribe and share this podcast. To discover more about how to create an exit ready business, I would like to invite you to join Kevin on his next workshop.

How to become an unstoppable business owner. Join Kevin by visiting kevindbanister. co. uk forward slash workshop.