Experts predict sector will benefit from Budget changes

Related tags Stamp duty Tax Chancellor gordon brown

The licensed property trade will benefit from the reforms announced by Chancellor Gordon Brown in the Budget, according to experts.Licensed property...

The licensed property trade will benefit from the reforms announced by Chancellor Gordon Brown in the Budget, according to experts.

Licensed property agents have welcomed Mr Brown's reform of stamp duty and business taxes. They believe cutting costs will help the pub sector to grow and encourage investment.

The reforms announced by Mr Brown include:

  • The abolition of stamp duty on all non-residential property transfers in the UK's most disadvantaged areas
  • The abolition of stamp duty nationally for the transfer of goodwill.

The changes, which are designed to streamline the system and make buying property easier, are intended to begin the process of purchasing property electronically.

Economic secretary to the Treasury Ruth Kelly said: "The case for change is overwhelming. Stamp duty on UK land and buildings is outdated. It does not reflect current commercial practice and it is not suited to the rapidly developing world of e-business."

James Shorthouse, director of Christie & Co, said: "This will promote investment in the small to medium-size businesses that form the core of the pub sector."

David Gredley, head of the pub/leisure team at Chesterton, agreed: "The abolition of stamp duty can only be good," he said. "It will encourage property transactions that may not have taken place otherwise."

Other measures announced in the Budget were greeted with a more mixed response. Tax cuts for small businesses, which included changes to the flat rate of VAT and corporation tax, were generally considered a good thing, but agents agreed it remains to be seen what the long-term benefits will be.

"The reductions in the tax regime for small companies, including the lowering of the starting rate of corporation tax from 10 per cent to zero and a reduction in the small companies' rate from 20p to 19p, could potentially benefit many publicans," Mr Shorthouse said.

"However, these benefits may be offset by the decision to raise National Insurance contributions and freeze personal allowances, the impact of which will be felt by both employers and employees. It is likely that this will lead to increased wage demands which may increase pressure on margins."

Barry Gilham from Fleurets said he thought the Budget was largely "neutral" as far as the licensed property market was concerned, but added: "The effective increase in personal taxation will also cause wage pressures from staff and give customers less disposable cash. However, in the overall context of a changing economy I could say that the Budget would be likely to move licensed property prices by a discernable amount."

More on the Budget:

Chancellor accused of "conning" beer drinkers (18 April 2002)

Small businesses boost from red tape cuts (18 April 2002)

PPSs hit by 65 per cent duty rise (18 April 2002)

Responses from the trade (18 April 2002)

Related topics Property law

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