Here’s a roundup from Chancellor Philip Hammond’s first Budget and how you as a small business could be affected…
Business rates
A recent topic in Think Enterprise was the recent business rate revaluation that has seen rates soar in some parts of the country. In our survey last month over 70% of our members believed that this change could represent a threat to their future business so welcome news indeed that the chancellor announced three main measures aimed to mitigate the impact of the rate change:
A rate cap will mean businesses exiting small business relief wont see their rates increase by more than £50 per month.
Pubs with a rateable value of less than £100,000 to receive a £1,000 discount on their rates (approximately 90% of all pubs).
A £300m fund will be made available to councils, providing discretionary rate relief for the worst affected businesses.
Tax
The chancellor expects the changes will raise £145m a year by 2021-22, however, only those who earn more than £16,250 will be affected;
- Class 4 national insurance contributions will rise by 1% to 10% from April (2018).
- Class 4 NICs rise again to 11% in 2019.
- Reduction in tax free dividend allowance for directors/shareholders from £5,000 to £2,000, this will take effect in April 2018
- Increase of tax threshold to £12,500 by 2020
- Increase of higher rate tax threshold to £50,000 by 2020
- Reduction in Corporation tax to 17% by 2020
Making Tax Digital
Making Tax Digital is a key part of the government’s plans to make it easier for individuals and businesses to get their tax right and keep on top of their affairs – meaning the end of the annual tax return for millions, it’s purpose is to;
- Make better use of information
- Provide tax in real time
- Provide a single financial account
- Interact digitally with customers
Businesses that have an annual turnover below the VAT registration threshold will not be required to start keeping digital records and providing quarterly updates until April 2019, although they can choose to do so voluntarily.
Education
A new ‘T-Level’ system, which overhauls technical education, has ambitions to place these vocational courses on an equal footing with academic work and improve Britain’s levels of productivity, which currently lag behind the United States and Germany.
The plans announced in the budget will increase the number of hours students train by 50% and replace the current 13,000 qualifications with 15. Extra funding of £500m a year will pay for the new system, according to the government. IOEE Chief Executive Sarah Trouten said “it’s encouraging that vocational programmes are being redesigned and promoted to young people as a valuable and worthwhile consideration however I would like to see evidence of entrepreneurial skills being developed across the 15 curricula areas to ensure young people are equipped to thrive and contribute to helping Britain prosper.”
The government will also provide maintenance loans for those entering part-time degrees, and doctoral loans of up to £25,000 to support higher-level study.
Tech and innovation boost
The chancellor announced plans to boost science and innovation with a further £500m of funding for electric vehicles, robotics and artificial intelligence.
The chancellor announced plans to invest £500m to boost science and innovation with support for electric vehicles, robotics and artificial intelligence.
The previously announced Industrial Strategy Challenge Fund (ISCF) will invest an initial £270m in 2017-18 on projects to speed up development of “disruptive technologies that have the potential to transform the UK economy”.
Plans also include a £16m funding for a new 5G mobile technology hub and £200m for local projects to leverage private sector investment in full-fibre broadband networks.
Some £250m from the NPIF will go towards improving the UK’s research skills base, with £90m allocated to provide an additional 1,000 PhD places, of which 85% will be in Stem (science, technology, engineering, mathematics) subjects. A further £160m will support new research fellowships.
Nat Hardwick Digital Director at SFEDI Group said “More investment in technology is always beneficial to the economy and we hope to see some of this make its way to small businesses. Entrepreneur-led technology startups are the companies of the future and it’s good news that the government sees the benefit in this kind of investment.”
Infrastructure and growth outside the capital
Investments in roads and rail, particularly for the Midlands and the north, were announced. Also, the government’s “Midlands Engine” strategy is to be launched on Thursday. This is an effort by the government to address growth outside of the capital similar to George Osborne’s “northern powerhouse” and is likely to focus on technical skills, infrastructure and productivity.