Spring Budget 2017: Highlights for businesses
In the wake of Chancellor Phillip Hammond’s first (and last) Spring Budget, we’ve pulled out the important bits and summarised them for your convenience.
Here, we’ll keep our eyes focused on what these changes mean for business and enterprise over the years to come.
After heavy backlash from the small business community, business rates were addressed by the chancellor and three main measures to mitigate the potentially damaging effects were announced.
- £300 million relief fund for discretionary use by local councils to provide breathing space for businesses in the area.
- Businesses that were originally set to lose small business rate relief will benefit from a cap of £50 per month on any set increase.
- Small, independent pubs will benefit from a proposed £1,000 reduction in their rates bills.
These measures have been met with a mixed response from the small business community, with FSB Chairman Mike Cherry commenting: “The £300 million discretionary relief fund for local authorities to target those businesses most in need is a very welcome short-term measure – but there is concern that the fund may not be big enough. Many small firms are already receiving their bills and so it is vital that Government and local councils communicate immediately with their local business population to explain how this fund will work.”
Tax avoidance crack-down
Companies will experience tougher measures to restrict their reporting methods on capital losses. Recording these as trading losses will be blocked with new policy measures, in addition to identifying and addressing the foreign pension scheme loopholes exploited by some.
Hammond has claimed these measures, together with the added penalty for tax dodgers, will raise a total of £820 million as the government works towards a system that is seemingly fair and just.
National Insurance and self-employment
Perhaps the most unwelcome new addition to this Budget is the rise in National Insurance Contributions for the self-employed. During his speech, Hammond called the difference paid between those in employment and those self-employed stark and unfair, and due to the introduction of the new state pension benefits scheme meaning all would now benefit – regardless of stated employment level.
The self-employed, it’s expected, will now see their payments increase, as a 1% rise in the rate of Class 4 National Insurance Contributions will take effect from April 2018, and another 1% in 2019.
Many have condemned these changes as anti-enterprise and breaking the Conservative party pledge made by David Cameron to stabilise NI taxes.
Mike Cherry comments: “The genuinely self-employed are fundamentally different to employees, they are risk takers that spearhead growth and productivity in our economy. They need help and support from the Government, given the spiralling costs of doing business, not additional tax burdens.
“There are many areas where the self-employed don’t receive the same provision as employees to Government funded benefits. Self-employed people also face higher barriers to entry, for example the access to income protection or mortgages.”
From April 2018, a new tax-free dividend policy will replace the older one, reducing it by £3,000 to £2,000. Why? The Chancellor stated the allowance permitted incorporation advantage, and this reduction will provide an extra £1 billion to be spent on public services in future.
The FSB have responded to these changes with concern, citing a “further disincentive for businesses to invest and grow”. And, as to the Government publication of the Business Tax Roadmap, the FSB has challenged how this will fit in with the plans to create a certain, stable future for small firms.
As previously mentioned in his Autumn Statement, Phillip Hammond reiterated his commitment to invest in ‘disruptive technology’, for ventures in biotech, robotic systems and driverless cars. This £270 million investment over the coming year, supported by an Industrial Strategy Challenge Fund, will aim to poise Britain as world leaders in development, design and manufacture of electric cars, improve healthcare through access to treatments and pioneer systems to accelerate and expand operations in hazardous environments, such as nuclear and off-shore energy as well as space and deep mining.
Fibre broadband will also be improved, with £200 million toward local projects announced. This investment is hoped to leverage private sector interest and bring communities together with emerging 5G network challenges.
The introduction of new ‘T-levels’ as a side to A-levels is hoped to boost business productivity, along with another £40 million to investigate different approaches to learning and help to boost a ‘life-long learning’ initiative. This is hoped to empower the workforce with the flexibility and freedom needed for a fulfilled and productive career and contribution to the economy.
What were your thoughts on the Spring budget? Will they benefit your business, or hamper growth? Please share your views in the comments section below.