The Isle of Man Chamber of Commerce has welcomed some aspects of the 2025 Budget - but says it will do little to address the main challenges facing businesses.

Treasury Minister Dr. Alex Allinson MHK unveiled the Budget last week, which includes a 1% cut to the higher rate of income tax, increases to personal allowances, and changes to National Insurance thresholds.

However, the Chamber, which represents nearly 500 organisations across the island, said more could have been done to tackle immediate and long-term issues.

While acknowledging measures such as the higher rate of income tax falling from 22% to 21% and a £250 increase in the personal tax allowance for individuals (£500 for jointly assessed couples), the Chamber said these changes offer limited relief.

‘A couple earning £60,000 will only save around £300 per year’, a Chamber spokesperson said.

The Budget also includes an increase in child benefit thresholds by £10,000, no rise in employer National Insurance contributions, and an increase in the tax cap for high earners to £220,000 annually.

Most benefits will rise in line with inflation, with reciprocal benefits increasing by 1.7% (UK CPI) and others by 2.2% (Manx CPI).

Despite these measures, the Chamber expressed disappointment at the lack of substantial tax changes for businesses.

‘The Budget won’t have a major impact on addressing the main challenges facing businesses and is unlikely to stimulate significant economic growth,’ it said.

Concerns were raised about the government’s continued reliance on reserve drawdowns, with £110.6 million being withdrawn in 2025-26.

A spokesperson said: ‘The continued drawdown on Government reserves is a major concern.

‘Some Chamber members take the view that maintaining reserves is misleading if borrowing is used elsewhere (e.g. the £400m bond).

‘Budget claims that income meets expenditure when £110.6m is still being withdrawn from reserves in 2025-26 need to be clarified.’

Skills shortages remain a pressing issue, with the Chamber criticising the removal of National Insurance incentives for returning Manx students.

‘This makes the Isle of Man less competitive compared to the UK,’ it said, adding that high housing, transport, and living costs further deter talent retention.

The Chamber also highlighted missed opportunities in addressing energy costs, infrastructure investment, and cultural and heritage support.

‘Tourism is a key growth opportunity, yet cultural assets are not better supported,’ it said.

Concerns over government spending discipline were also raised, with members sceptical about departments sticking to budgets and calling for reviews of non-essential activities.

‘The Budget encourages de-industrialisation rather than economic resilience.

‘Key growth factors like wages, transport links, and energy costs were not addressed,’ it warned.

With reserve forecasts predicting growth to £2 billion and the National Insurance fund reaching £1 billion by 2030, the Chamber questioned whether these targets are achievable given current borrowing, including a £400 million green bond and other liabilities like local housing loans and civil service pensions.

‘We remain committed to working with the government to tackle these challenges and improve the island’s economic prospects,’ the Chamber concluded.