‘Not going to help in any way’: Hunt’s tax cuts bring little joy to sole traders
On an industrial estate in Erdington, north Birmingham, a stream of vans – roofers, removal services, delivery drivers – pull into Katie Smith’s family garage for maintenance or repairs.
But a glance at the company accounts reveals a problem – many of these customers, mainly self-employed tradespeople or small businesses, are not paying their invoices on time, and Smith’s family is waiting on more than £80,000 worth of bills to be settled.
“There are so many people that we are trying to chase,” said Smith, 38. “But I’ve spoken to them all personally, and I know they’re struggling. One guy I spoke to said because fuel has gone up, insurance has gone up, bills have gone up, he can’t afford it. People aren’t paying themselves or are closing their companies.
“So something that saves people a couple of hundred quid a year – spread over 12 months, that’s nothing. The government might be trying to show they’re helping, but they’re not.”
On Wednesday, the chancellor, Jeremy Hunt, delivered the autumn statement, in which there were a number of pledges that seemed designed to appeal to sole traders, such as a cut in national insurance contributions for the self-employed.
Class 2 contributions, paid on earnings above £12,570 a year, will be abolished, while class 4 contributions on all earnings between £12,570 and £50,270 will be cut from a rate of 9% to 8%.
But many tradespeople said the cuts were a drop in the ocean as costs had gone up and, for some, businesses had closed as people reined in their spending.
Ian Smith, a self-employed electrician from Manchester and no relation to Kate Smith, said the measures announced by Hunt were “not going to help me in any way, shape or form”.
“It’s only £450 a year. It’s nothing,” said Smith, 45. “What they need to be doing is lowering income tax, council tax needs to be lowered, take the VAT off food – stuff like that.
“It’s the everyday stuff that you need lowered, not tax incentives and breaks. It’s an absolutely nonentity what they’ve given us.”
Adam Kelly, a self-employed gardener from Manchester, also felt the tax cuts would do little to help amid the cost of living crisis.
“The amount that the mortgage has gone up by, it feels like any savings get offset against another price that’s gone up,” said Kelly, 45. “That money isn’t going to increase my budget, or mean we can suddenly afford to go on a nice foreign holiday.
“It’s not a significant amount of money, is it? So it’s money that just kind of dribbles out of one pot and goes into another pot. Nothing they announce is radical enough to make a difference,” he said.
Around the corner from Kate Smith’s garage, the forecourt of Birmingham Van Centre is crammed full of white vans for sale.
“It’s so quiet. And this month has been particularly bad,” said Lewis Quinn, 30, a sales executive on the site. “People are only buying if their van has broken down or been stolen.
“The cost of vans has gone up so much, we’re talking double the monthly payments. And sole traders, they’re struggling at the moment. I don’t think these tax cuts will make much difference.”
The announcements have, however, won the backing of trade bodies representing many of the UK’s tradespeople.
Tina McKenzie from the Federation of Small Businesses said reducing the rate of national insurance for the self-employed and abolishing the class 2 contributions would “ease the burden on strivers up and down the country”.
Brian Berry, the chief executive of the Federation of Master Builders, said the changes would help stimulate much needed growth in the economy – but added: “It must only be the start if the government is serious about tackling the challenges we continue to face.”