Healey’s ‘inconsequential’ budget is business as usual – unless you’re an entrepreneur

Rachel Reeves never quite lived down the £25bn hike to employer National Insurance she levied on business in 2024. By contrast, John Healey’s play-it-safe budget hasn’t ruffled too many feathers. “Inconsequential” was the main takeaway from Steven Fine, chief executive of the investment bank Peel Hunt. “Markets can easily tolerate what’s going on. Some nice giveaways, nothing major. The bank and gambling taxes weren’t as bad as expected and it’s definitely not inflationary.”

That didn’t mean the business piñata avoided a whack. A cut to capital allowances – a way of deducting the cost of buying equipment from a company’s taxable profits, spread over several years – will raise about £1.1bn a year for the exchequer (although the allowance for new kit in the first year has risen from 40% to 50%). “One of the big frustrations is how they’ve chopped and changed it so much over the last few years,” says Louise Hellem, chief economist at the CBI.

“It’s dropping again from 14% to 12%. I think that will be very unpopular with investors, and it really just adds that sense of instability in the UK regime.” Healey’s other big revenue raiser was a heavily pitch-rolled increase in extra corporation tax levied on banks, rising from 3% to 6% for 15 months from January. It’s gone down fine. Shares in Lloyds, NatWest, and Barclays all climbed 3% following the speech. Bond markets didn’t really budge, and gilts outperformed Treasuries on the day.

The FTSE 100 was slightly up. Additional VAT charges on large ride-hailing firms and online selling platforms could boost the coffers by about £700m a year. Removing a tax exemption for foreign state investors and sovereign wealth funds could raise about the same, but has a high degree of uncertainty according to the OBR. Some of the business community’s biggest bugbears – employment costs, and reform of business rates that goes beyond carve outs for retail and hospitality – didn’t really feature.

The share prices of house builders slumped due to a lack of clarity provided on the chancellor’s Your First Home scheme . But there is one subset of the business community that is rejoicing: founders and entrepreneurs. Founders of “high-growth” companies will soon be subject to a lower 10% capital gains tax rate, covering up to £10m of gains over a lifetime at a cost to the Treasury of £260m-300m a year. Some of that will be paid for by halving the lifetime limit to Business Asset Disposal Relief, the lower capital gains tax rate for selling a business.

Related articles: No omnishambles to see here: Healey’s ‘breathing space’ budget plays it safe Healey’s warm-up budget will leave radical reformers cold “I’m delighted with the budget and always have been,” said Alexandra Depledge, who will step down tomorrow from her role as the chancellor’s adviser on entrepreneurship, after a long campaign. “I got exactly what I asked for… This is going to be massive for the founders’ community.” Photograph by Dan Kitwood/Getty Images Economy Business Tax Budget John Healey