There has been much talk amongst my fashion industry clients about last month’s Budget. The VAT increase to 20% will almost certainly be a burden on the high street however the increase was generally expected by the majority of people I have spoken to.
Some respite has been offered by the delay until January 2011 and at least retailers have been through the process once already so should have the systems in place to be able to cope with the change. However coupled with other economic stresses, inflation remains a concern amongst many businesses.
The main positives commented on by those I have spoken to include the 1% increase in employers’ NI being offset by the increase in the threshold (up by £21 per week from April 2011) and the reduction in corporation tax rates from April 2011. The CGT increase seems not be as high as was generally expected (increase to 28% for higher rate payers) and there has been much gratification that gains qualifying for entrepreneurs’ relief continue to be taxed at 10%, with the lifetime limit being increased from £2m to £5m. Changes in capital allowances mean that businesses should plan when to make capital investment in order to maximise allowances.
The general feeling of those I have spoken to in the last couple of weeks is that they continue to be cautious and are still fearful of hard times ahead. We as a business also feel the same. Time will tell but one thing I have learnt throughout the last challenging couple of years is that customer service has never been more important and this has enabled us to retain and grow my client base. Whilst a slow road to recovery lies ahead, we can all take a tip from Mr Armani’s collection at Couture Fashion Week – it’s key that businesses remain fluid and flexible during these changing times.
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