On 8 March, Chancellor Philip Hammond delivered his final spring budget. From 2017, the budget will be moving to the autumn, with a spring statement instead. The intention is to allow more time for changes to be made before the next tax year.
Here are some of the key points that were announced:
- Growth in the UK economy picked up through 2016, and the Office for Budget Responsibility (OBR) forecasts that the UK economy will grow by 2% in 2017, at a slightly slower rate in 2018, and then up to 2% in 2021
- Britain’s debt stands at nearly £1.7 trillion – around £62,000 for every household in the country. In 2009-10 the UK borrowed £1 in every £5 spent. This year it is set to be £1 in every £15. Borrowing is forecast to reduce by nearly three quarters by 2016-17.
- Employment has reached a record high of 31.8 million people
How the Budget affects SMEs
Here are some of the ways that SMEs and start-ups will be affected by the recent announcements:
- There is a cut in dividend allowance for company shareholders
- If you are an unincorporated business with an annual turnover below the VAT registration threshold, Making Tax Digital will become mandatory in April 2019 – after that, you will have to use digital software to keep your tax records and update HMRC every quarter
- Self-employed people will have to pay increased
- Small businesses with minimal expenses (less than £2,000 a year) will now have to pay 16.5% under the Flat Rate VAT scheme
Rising business rates
We’ve written about rising business rates before, but here are some of the ways the Chancellor is sweetening the pill:
- Business rates are increasing for certain sectors, especially the digital economy – but no small business that is coming out of small business rates relief will pay more than £600 more in business rates this year compared with 2016-17
- Local authorities have been granted £300 million of discretionary relief they can use to help businesses most affected by the revaluation
- From April 2017, pubs with a rateable value up to £100,000 will be able to claim a discount for of £1,000 on their business rates for one year
Your business may be fined if you mislead or mistreat consumers. For example, if you charge consumers unexpectedly when a subscription is renewed or a free trial ends, or if your terms and conditions are too long, complicated or jargon-filled.
£500 million is to be invested in technical education for 16 to 19-year-olds, with new T-levels being introduced from autumn 2019 covering 15 different subjects including construction, digital and agriculture. Students doing high-level technical courses at National Colleges and Institutes of Technology will be able to access maintenance loans from the government.
£270 million has been allocated to the Industrial Strategy Challenge Fund, to support research and innovation in:
- Artificial intelligence and robotics that will work in extreme environments
- Better batteries for electric vehicles that will help improve our air quality
- Medicine manufacturing technologies to speed up patient access to drugs
£210 million will create new fellowships and programmes to attract top global talent to conduct research in areas such as bioscience and biotechnology, quantum technologies, and satellite and space technology.
£200 million is going towards local projects to build fast and reliable full-fibre broadband networks.
£90 million will provide 1,000 new PhD places, including in science, technology, engineering and maths.
£16 million is being invested into a national 5G Innovation Network to trial new 5G technology.
EIS tax relief
It has previously been indicated that the government will be reviewing existing tax reliefs aimed at encouraging investment and entrepreneurship (such as the EIS) to ensure that they are “effective, well targeted, and provide value for money”, however, Philip Hammond didn’t mention any change to Enterprise Investment Schemes at this stage.
We can only wait and see…
Akoni helps businesses make the most of their cash. Register for free at AkoniHub.com