- The Budget 2017 – what it means for businesses
The Budget 2017 – what it means for businesses
The Budget 2017 – what it means for businesses10 Mar 2017
On Wednesday, Philip Hammond delivered his first Spring Budget as Chancellor. The Budget is the last before the UK begins the formal Brexit process and is the last Spring Budget before it is moved permanently to the Autumn.
The key points of the announcement which will be of importance to businesses included the following:
- Growth is forecast at 2% for 2017. This is up from 1.4%.
- Business rates are to be capped to £50 per month for small businesses facing the loss of small business relief. £300 million will also be given to local authorities for a ‘discretionary fund’ to help small companies that have been badly hit by the removal of the small business rate relief. The Chancellor also announced a £1,000 business rate relief for 90% of pubs. This will be of some comfort to those who have lost the small business rates relief.
- There will be a delay of a year to April 2019 for small businesses in the launch of Making Tax Digital and having to register for quarterly reporting. This gives small businesses additional time to become equipped to responding to this new measure.
- The tax free dividend allowance for shareholders will be cut from £5,000 to £2,000 from April 2018. This will be particularly hard hitting to small family businesses who may use the dividend exemption to pay family members.
- National Insurance Contributions will rise for the self-employed. The rates will rise from 1% to 10% in April 2018 and to 11% in April 2019 for those earning between £8,060 and £43,000. This will mean 2.5 million self-employed people will pay an extra £240 a year.
- The Government confirmed that Corporation Tax will reduce from 20% to 19% this April and to 17% in April 2020.
- The national living wage will rise from £7.50 from April.
- £90 million will be spent on transport in the north of England. This is part of the Chancellor’s commitment to the North’s transport infrastructure and the Northern Powerhouse.
- A further £270 million will be devoted to keeping the UK at the forefront of technologies such as biotech, robotic systems and driverless vehicles. This is of particular importance to the advanced industries sector in the North West.
The budget was relatively low in many ways but it was notable that Brexit was barely mentioned. The important points for SMEs and owner managed businesses are those relating to tax increases and dividend cuts. It seems that the Government are trying to level the playing field between owner managed businesses and those who are employed, and business owners should prepare early for the changes that have been announced.