'Trepidation' as racing industry braces itself for impact of chancellor Rachel Reeves' budget

Racecourse contributions to prize-money could be threatened if speculation about some of the measures contained in Wednesday's budget proves to be correct, it has been claimed.

David Armstrong, chief executive of the Racecourse Association, said there was some trepidation as chancellor of the exchequer Rachel Reeves prepares to lay out her plans amid talk of tax rises and spending cuts.

That trepidation is shared by Britain's breeding industry, which could face further contraction if some of the mooted proposals come to fruition, the Thoroughbred Breeders Association (TBA) has said.

There had been reports that Reeves was considering a major hike in gambling duties to help fill the reported £40 billion funding gap, although they were subsequently played down by ministers.

However, British racing could be affected by a number of other measures such as increases in employers' national insurance contributions and changes to inheritance tax.

Racecourse Association chief executive David ArmstrongCredit: Edward Whitaker (racingpost.com/photos)

"I think there is quite a bit of trepidation," Armstrong said. "It has been mooted there will be an increase in employers' national insurance and across racecourses that would cost in the order of half a million pounds – and I would emphasise trainers and breeders employ far more people than we do, so the impact on them will probably be greater.

"The challenge we have is what do you do when you've got a half-million-pound hit like that. It's very hard to absorb that within existing budgets. We can't really put prices up for customers because we meet some price resistance.

"The risk is either you end up making people redundant or the other risk is that prize-money falls. I would hope that racecourses will be able to find a way to absorb it but they might not be able to."

Armstrong said another important factor for racecourses was what would be done with business rates.

"There has been speculation around changes to business rates in the budget," he said. "Certain concessions that have been enjoyed might be ending or business rates might rise.

"That has a very material effect on racecourses as well. It has been one of those areas where racecourses have seen significant cost increases over the last couple of years during the cost of living crisis.

"It was never likely to be a budget where we got much good news from a racing point of view and that's before we get to the question of betting tax. That itself is the biggest risk."

Thoroughbred Breeders Association chairman Philip Newton

TBA chairman Philip Newton said the impact of the budget upon Britain's breeding industry "should not be underestimated", with the recently published Return of Mares showing a fall in the 2024 foal crop of six per cent and studies detailing a loss of more than 1,600 breeders since 2009. 

He added: "Most of these were small breeders who have been the foundation of British breeding, providing approximately 40 per cent of the foal crop."

Newton said breeders had faced "significant financial headwinds" within the sector directly along with rising costs elsewhere. He said that mounting pressures "have persuaded many breeders to exit the industry".

He added: "Those that remain now face not only the continuing challenging fiscal circumstances of the breeding industry but are the exact demographic that will be most affected by several measures which are being mooted by the chancellor."

Newton said any increase in national insurance contributions "will further add to the cost of employing staff" for breeders, while inheritance tax changes were likely to "accelerate the disappearance of those smaller studs, via estate planning or sale because of death".

He also claimed increases in capital gains tax would "prevent sales of small parcels of stud land that generated sufficient cash to keep the ship afloat".

Newton added: "In isolation each one of these tax changes might have been manageable, but taken as a whole they will undoubtedly see the British breeding base contract further and the law of unintended consequences may well have its say.

"There is clear and irrefutable evidence that the breeding industry is under the most severe pressures. A sustainable foal crop is essential for the racing programme and this will now be placed under greater threat by the chancellor's actions, placing at risk an industry worth £4.3bn to the economy, direct taxation income of £400m and 80,000 jobs."

2024 budget - what to look out for

Gambling duties

It was reported recently that the Treasury was considering proposals made by think tanks to raise as much as £3 billion through huge rises in general betting duty and remote gaming duty. However, culture secretary Lisa Nandy subsequently appeared to play down those reports in parliament.

National insurance

There has been speculation that the amount employers pay in national insurance could increase by as much as two percentage points, affecting businesses across racing.

Business rates

The Labour manifesto committed to reform of the business rates system and Reeves said she would be setting out details in the budget.

Inheritance tax

It has been claimed ministers are looking to raise money from inheritance tax, potentially by making changes to some of the exemptions such as agricultural property relief and business property relief. The National Farmers Union wrote to the chancellor last week warning that such changes would make many family farms unviable and there are fears such concerns would also apply to the breeding industry.

Minimum wage

Reports have suggested the chancellor will unveil a bigger than expected increase in both the national minimum wage and national living wage in the budget, again affecting employers in racing such as racecourses.

Fuel duty

The cost of transporting horses could rise as Reeves is said to be considering reversing a 2022 cut in fuel duty and reinstating inflationary rises.

Read these next:

Culture secretary Lisa Nandy plays down tax rise reports and talks up horseracing industry 

'This is in no one's interest' - gambling giant warns of unintended consequences of tax hike 

'It will derail racing' - industry sounds stark warning following report Treasury is considering gambling tax hike 

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