Peter Matthews: what merchants need to know.
Pre-Budget: how it will affect builders' merchants
Published: 10 December, 2009
LONDON: Peter Matthews, secretary of the Builders' Merchants Federation, offered a summary of how the Chancellor's pre-Budget report will affect merchants in the months to come.
CONSTRUCTION AND A LOW CARBON BRITAIN
The Chancellor announced a new boiler scrappage scheme (like the current car offer) to help 125 000 households replace their old boiler with an energy-efficient model. There are scant details available – the Government has yet to work out the arrangements with the plumbing industry. But, the BMF understands:
A £400 grant will be made available to everyone (irrespective of income) provided a homeowner pays for a new condensing boiler to be fitted (typical spend £2000+) To be eligible, a homeowner must already have an existing old inefficient G-rated boiler in situ that is to be replaced. It is likely to be on a 'first-come, first-basis'.
The plumbing industry is expected to administer the payments.
The scheme is expected to come into force "at the earliest opportunity" in 2010.
The Chancellor also announced:
An extra £200m for energy-efficiency (including home insulation); £150m to help extra 75 000 households under the Warm Front fuel poverty scheme and the remaining £50m for boiler scrappage.
There will be a £900/year tax-free payment to homeowners who sell electricity back to the National Grid that has been generated from their domestic solar panels or wind turbines.
Electric cars to be exempt from company car tax for five years – and a 100% first-year capital allowance for electric vans.
A roll-out of electricity smart meters will be completed by 2020.
The Stamp Duty holiday will end on 31 December and the threshold will revert to £125 000.
There will be an extension of high-speed broadband to 90% of the UK – to be paid for by a 50p a month levy on all telephone landlines.
The creation of Infrastructure UK is planned. Body will advise the Government on large national infrastructure projects over the next 50 years ( high-speed railways; water, waste and electricity networks and the next generation of broadband).
"The BMF is disappointed that the Chancellor did not lower the VAT rate to 5% for RMI work or announce any new measures to increase housebuilding activity," said Mr Matthews.
YOU AND YOUR BUSINESS
The Chancellor announced:
That standard VAT rate reverts to 17.5% from 1 January 2010 (there will be no other VAT changes).
National Insurance will increase by an extra 0.5% from 2011 – on top of already planned 0.5% increase – (a whole 1% rise in April 2011) – but threshold will be raised so no-one earning less than £20 000 will pay it.
A planned 1p increase in Corporation Tax for small businesses will be deferred.
The HMRC 'Time To Pay' scheme (that allows firms to spread their tax payments) will be extended for as long as needed.
Basic State Pension will go up by 2.5% from April 2010.
Employer pension contribution to be included in definition of tax income relating to pensions' tax relief for anyone earning over £130 000.
Inheritance Tax to be frozen at £325 000 for the next year.
No changes to Income Tax rates and thresholds to stay the same.
In April 2012, the point at which people start paying 40% Income Tax to be frozen for a year will affect anyone earning more than £43 000.
The extension of the exemption of empty, smaller commercial property from business rates.
"There was no mention ofany variation in the National Minimum Wage, any changes to vehicle fuel duty, any alterations to statutory redundancy pay of the extension of Government's trade credit insurance top-up scheme," Mr Matthews explained.
The BMF will start delving into the fine detail of yesterday's announcements – and keep its members informed through its 'Business News' and 'Link' as the bigger picture emerges.