Businesses have been left with difficult choices to make as a result of the Budget - Sarah Harrison

The most common concern is the increased cost of employees arising from the changes to National Insurance Contributions and the increase in National Minimum Wage. Every business will be affected, large and small, across all sectors, as their overall cost base increases by a significant proportion.

This leaves business owners with difficult choices to make. Do they take direct action to cut their employee costs, whether by reducing (or foregoing entirely) salary increases, halting recruitment plans or possibly even making redundancies. Or do they seek to mitigate or balance the extra cost in other ways.

Those looking for alternative strategies to protect their people are considering passing some of the additional cost onto customers, striving to find efficiencies in business operations, or postponing other investment decisions to preserve resources. These answers aren’t always straightforward though and can have their own long-term impacts.

Businesses hit hardest will be those which have large numbers of employees on lower salaries, particularly businesses in the retail, hospitality and healthcare sectors. For some businesses in these sectors that have barely managed to recover from the effects of the pandemic, the additional burden may prove too much.

Beyond employee costs, businesses also need to navigate the significant changes to inheritance tax (IHT), which is especially pertinent for family-owned businesses.

Yorkshire is renowned for its family businesses, with hundreds across the region.

At one of our recent family business events, there was real concern about what would happen to businesses that were intended to pass to the next generation, but which will now create a significant tax bill. Without other liquid assets in the estate to meet the IHT liability, families may be forced to sell the business just to be able to pay the tax.

As a result, many family business owners are having to put in place or revisit strategic succession plans to protect their legacies. This may mean passing shares down to children earlier than intended, but this can bring its own complications if they aren’t quite ready to take over. The key is to balance the needs of the business now with a longer-term succession strategy.

But it’s not just family-owned businesses that need to have a plan. Any business with multiple owners needs to think about what would happen if one of them were to die and the estate is forced to sell the deceased’s shares to pay the IHT – the business itself may have to fund the purchase for the surviving owners to retain control.

There’s no doubt the budget has created some challenges and there may be some tough decisions ahead, but Yorkshire has a resilient business community that has weathered storms before. Businesses across the region are taking a breath to seek advice, ask questions and weigh up their options in order to create strategies to continue to thrive.

Sarah Harrison is a partner in the Clarion Solicitors corporate team.