Philip Hammond presented his third Budget on Monday 29th October which should be the last one before Brexit in March next year. Mr Hammond announced the end to austerity, but I’m sure many small businesses owners will be rather sceptical of this, as trading in most sectors is still tough.
There were many positives for the small business community, but there is still uncertainty if these will be enough, as Mr Hammond mentioned these plans may be damaged if the UK does not secure a good Brexit deal. Another Budget will be needed in the event of a no-deal Brexit, which would most likely happen instead of the smaller Spring budget update.
I’ve put together a list of the Budget announcements that I think will affect the SME sector the most.
- If you drive for a living – Fuel duty was frozen for another year. So if you’re a taxi driver, lorry driver, delivery person etc. at least you won’t have to pay more tax on your fuel.
- Flying short-haul – Air passenger duty for short-haul fights will be frozen at 2012 levels, so if you have to attend meetings regularly and travel on short flights across the country, this will benefit you.
- Young rail travellers – A new 26-30 railcard will be introduced by the end of 2018. It’ll offer a 1/3 discount (subject to a minimum £12 fare in the morning peak) – so if you’re under 30 and have to travel a lot on trains for your business, you’ll be able to save some money there.
- For those with employees on the National Living Wage – it will be increased by 4.9% to £8.21, so make sure you update your payroll to accommodate this.
- If you’re a self-employed contractor to a medium or large business – IR35 governs whether self-employed people are considered to be contractors or directly employed by a company or organisation. There has already been a change for public sector workers, which has been controversial and has led to many contractors being taxed as employees, but not receiving the same benefits. A change in taxation of self-employed contractors in the private sector will now come into force in April 2020 and will see many more people come under the new rules. So if you contract staff or are a contractor yourself, then keep an eye out for this, I’m hoping that it is handled much more carefully than the public sector roll-out.
- Income tax personal allowance – this is rising to £12,500, higher rate threshold lifted to £50,000. If you’re an owner of a business then your employees will benefit from this, so don’t forget to update your payroll (you’ll also benefit too if you have a limited company and take a wage).
- Shareholders in start-up companies – Entrepreneurs’ Relief for Capital Gains Tax has been identified as a troubled area, as the government has noted, there has been some abuse of this benefit. In addition to the current requirements, shareholders must now also be entitled to at least 5% of the distributed profits and net assets of a company to be able to claim the relief.
- Rate cut for small retail businesses – Leaked a few days ago there will be a cut in business rates bills by 1/3 (around £900m altogether) for lots of small high street shops. This should aid the retailers on the struggling high-streets and hopefully allow some of them to keep afloat. Businesses with a rateable value of £51,000 and under, will see their bill cut by 1/3 over a two-year period. The Budget also included a £675m transformation fund for local high streets to help them thrive again.
- If you produce plastic items – Companies manufacturing plastic that is less than 30% recycled material will now face a levy.
- Hiring apprentices – Apprentices can be great for many small businesses, taking on someone you can train up and help you day-to-day in the business. It was announced that small businesses will now only have to contribute 5% to the apprenticeship fees – which is halved from the previous 10%.
In my verdict this Budget is pretty good for small businesses. Financially the smallest businesses should feel some benefit, although whether it’s enough to counteract the current economic climate and the uncertainty of Brexit, is yet to be seen.
The Federation of Small Businesses has viewed the Budget positively – Mike Cherry, Federation of Small Businesses National Chairman, said: “This is the most small-business-friendly Budget that this Chancellor has delivered. He has listened to our requests across many areas of tax and public policy, putting him firmly on the side of Britain’s small businesses.”
Hopefully you’ll see some positive outcomes from this latest Budget announcement in your own business.