Yesterday evening Chancellor Philip Hammond tweeted that he was putting the finishing touches to his first Budget and this lunchtime he revealed his vision for building a “stronger, fairer, better Britain” outside the EU.
So, at a time when many small business owners are concerned about the future, what was included in his speech and how does it affect our business community? Here’s a summary…
Prospects for the economy
The Chancellor told MPs that there is no room for complacency as while the deficit is down, debt is still too high and productivity remains “stubbornly low”.
The independent Office for Budget Responsibility has raised its economic growth forecasts for this year. It now expects the UK economy to grow 2 per cent rather than 1.4 per cent.
In 2018 growth is forecast to slow to 1.6 per cent, before picking up to 1.7 per cent, then 1.9 per cent, and back to 2 per cent in 2021, he added.
Business rates support
Productivity was the buzz-word of the Autumn Statement, however many small business owners have expressed their concern about the changes to business rates, claiming that a sharp increase in payment will seriously damage their productivity. The Federation of Small Businesses (FSB) have reported that half those SMEs facing hikes will reduce, postpone or cancel investment.
Today the Chancellor used his budget platform to state he will find funds to help firms hit by the sharpest rises in business rates, and claim that he is also looking to overhaul the whole business rates system. Philip Hammond pledged three new measures:
Any business coming out of small business rate relief will benefit from an extra cap – meaning their rates will not increase by more than £50 a month
There will be a £1,000 discount on business rate bills for all pubs with rateable value of less than £100,000 (90% of all pubs)
A £300m fund will be made available to councils to allow them to provide discretional relief
Many small business and self-employed traders will have been hoping that the Chancellor would have reconsidered some of the proposals from his Autumn Statement including changes to the VAT Flat Rate Scheme and public sector IR35 rules. However, he said that the Treasury will raise £145m by 2021-22 through extra tax on the self-employed and announced that class 4 NICs will increase from 2% to 10% in 2018, with a further 1% increase in 2019.
It was also announced that the tax-free dividend allowance for directors/shareholders will be reduced from £5,000 to £2,000 with effect from April 2018.
£500 million to plug the post-Brexit skills gap
The Government have long been given the message that the skills gap needs to be plugged for Britain’s small businesses to grow and succeed. The Chancellor announced an overhaul of the education system with the funds going on a greater focus on technical training and skills.
The plans also include replacing 13,000 existing qualifications with 15 “routes” linked to the needs of employers. Maintenance loans will be made available for eligible students in further education or at a technical college. The new courses are expected to start from the 2019/20 academic year.
The move is said to be part of the Government’s plan to tackle weaknesses in the UK’s productivity levels.
Introduction of quarterly reporting delayed for small businesses for a year, at a cost of £280m
£500 million for manufacturing and artificial intelligence
Plans to make hundreds of millions of pounds available to develop solutions to hi-tech challenges including artificial intelligence and robotics were outlined by the Chancellor.
£5 million for equality projects
This international women’s day the Chancellor announced a new £5 million fund in the Budget for women’s equality projects, to mark the upcoming centenary of legislation which gave women the right to vote. Women now account for nearly a third (32%) of all self-employment compared with 28 per cent of self-employment before the 2008 recession (ONS).
£5 million has also been earmarked for parents returning to the public and private sector, helping people back into employment after a career break.
National living wage rise to £7.50 in April
In addition to this the Personal Allowance will rise to £11,500, and the higher rate threshold to £45,000.
£200 million for fibre broadband
Finally, local projects to attract private sector investment in full-fibre broadband networks will be given a cash injection of £200 million. Full fibre-broadband vouchers will be offered to businesses.