Budget case study: the small business owner

Publican Jack Limond welcomes the extension of the small business rate relief holiday announced in the budget ? but not the rise in alcohol tax

This article titled “Budget case study: the small business owner” was written by Mark King, for guardian.co.uk on Wednesday 23rd March 2011 18.01 UTC

Publican Jack Limond, his wife Hannah and their two children live in the pretty town of Clun, in the South Shropshire hills.

Jack, 43, owns the White Horse Inn and has run it for 10 years. He and Hannah both take a salary from the freehold business of about £12,000 (£6,000 each, which is “just enough to pay our stamps”) which puts them below the level at which they would pay income tax. They also take £15,000 from the business in the form of dividend income. The remainder is left in the business so they can take working tax credits.

Jack thought the budget was “actually quite good, considering I thought we would come out of it quite rough”. He was pleased that the small business rate relief holiday is to be extended until October 2012, because it is worth about £200 a month to him.

He was also pleased Osborne had turned his attention to rising fuel costs: “It cost me £80 to fill up my car this morning ? for the first time ever. Every little helps, but it probably won’t affect the business as suppliers’ prices are set now and unlikely to come down.”

While a five-percentage point reduction in corporation tax by 2014 was announced by George Osborne, it does not apply to smaller businesses, which will benefit only from the previously-announced drop in their rate to 20%. “It’s a pity that it doesn’t apply to us because it would have been fantastic and been a big help,” Jack says.

Both Jack and Hannah will see no benefit from the increase in the personal allowance as they pay no income tax, but as an employer he was pleased with the small rise in the NI threshold as, “it will take some of my employees’ hours out of the tax regime”.

The chancellor confirmed that alcohol tax will rise by 2% above inflation (a total rise of 7.5%) at midnight on Sunday ? leaving Limond fuming.

“I’m not surprised, as chancellors always seem to ignore the concerns of the pub trade,” he says. “It’ll end up being about 5p a pint at the till and I’ll have to pass the cost on almost instantly, though customers don’t appreciate it. If I was more food-led as a business I might be able to absorb it, but I’m 70% wet sales and 60% of that is draft. If I don’t pass it on I’ll be trading at a loss next year.”

Jack laughs at the idea that the government might have chosen the budget to level the playing field on alcohol duty by forcing supermarkets to pay the same as pubs . “It seems to me that the supermarkets, having finished the wholesale removal of grocers, bakers, butchers, greengrocers and off-licenses from the high street, are now working on the pub. But there is too much money going in party coffers for anything to be done about it.”

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