Budget 2017: Business owners react
Following the last ever spring budget, entrepreneurs share their thoughts and opinions on chancellor Philip Hammond's policy announcements
In the last ever spring budget, chancellor Philip Hammond reiterated the government’s commitment to make Britain “the best place in the world to run and start a business”, while simultaneously “building an economy that works for everybody.”
Announcing a range of policies regarding business rates, self-employed taxation and tech education, we’ve rounded up some reactions from UK entrepreneurs, small business owners, and those in the space, to find out whether they’re happy with Budget 2017.
On raising National Insurance for the self-employed
Alice Weightman, founder and CEO of The Work Crowd:
“The rise in National Insurance contributions will make freelancing a more difficult option for these [economically inactive] people, potentially pushing them out of work. After all, the self-employed are already missing out on maternity pay, employee benefits and the job security that permanent employees enjoy.
“There’s also the danger that it could drive the freelance economy out of the UK altogether, making it too expensive to make a living here. For many, freelancing is the first step on the ladder towards starting a fully-fledged business, employing staff and driving our economic growth.
“Furthermore, start-ups and small businesses have become reliant on freelancers as a flexible and affordable source of talent. It isn’t always economical for businesses to hire staff on a permanent basis and freelancers provide an invaluable service to these companies, supporting growth and innovation with their expertise.
“The tax rise for freelancers will be counterproductive, either driving individuals to stop working independently, or driving up costs, impacting the small businesses and startups that are key to the UK economy.
“The self-employed need more support and engagement, not more taxes.”
Sam Dumitriu, head of projects at the Adam Smith Institute:
“It’s right to bring National Insurance on the self-employed in line with that paid by employees. The current system is in effect a subsidy of £1,240, and although the self-employed do have mildly reduced access to some contributory benefits, given the choice almost everyone would plump for the £1,240.
“But the chancellor must ensure he is not discouraging the self-employed from investing – and allow them to immediately deduct capital expenditures from their taxable income. We shouldn’t be looking to increase the overall tax burden – especially not on low income workers. So we should use the extra revenue raised to cut the overall National Insurance rate.”
Chas Roy-Chowdhury, head of tax at ACCA:
‘While it is great to see that the government has listened to the concerns of the business community with regard to business rates and the upcoming rollout of Making Tax Digital (MTD), ACCA is concerned that an increase in the NIC for the self-employed will be harmful for UK growth and entrepreneurship.”
Barnaby Lashbrooke, founder of Time Etc:
“Instead of preserving Britain’s culture of entrepreneurialism, Mr Hammond has instead imposed heavier NICs on the self-employed, who don’t get the luxury of paid annual leave, employer pension contributions or enhanced parental leave pay, and must support themselves through periods of no work.
“For those reasons alone, self-employed workers should not be expected to contribute the same as employees.
“The rise in self-employment has little to do with tax avoidance. It’s partly the result of a skills shortage – talent is in high demand – as well as advancements in technology that have enabled the sharing economy.”
On the rise in business rates
Peter Tuvey, co-founder of Fleximize:
“It’s imperative that the consultation on this review is launched as soon as possible, along with plans for implementation. I’m glad that the government has listened to businesses concerns around business rates. It’s clear that the current system is out-of-date and unsustainable in today’s economic climate, and I welcome the chancellor’s pledge to review the way that rates are charged.
“With small businesses accounting for 99.9% of all private sector businesses in the UK, it makes sense for the government to actively support their growth, especially considering the challenges brought about by Brexit.”
Peter Finnie, managing partner at Gill Jennings & Every:
“The introduction of a ’transitional cap’ on business rates for companies coming out of small business relief will benefit fast-growing businesses, and is a step in the right direction — especially as rocketing commercial property prices and rental costs threaten to undermine the capital’s reputation for supporting the creation and growth of technology businesses and other cities such as Berlin and Amsterdam look to capitalise on the uncertainty created by Brexit to woo entrepreneurs abroad.
“But they do not go far enough. Stronger measures — such as the three-year business rates exemption for new business proposed by Central Working in an open letter to the government earlier this week — will be necessary to ensure that startups have the security and confidence they need to set themselves on a stable footing. IP in particular — the cornerstone of value for any technology business — can take some time to assess and protect, and stability is vital.”
Tim Sawyer, CEO of the Start Up Loans:
“The business rate measures outlined today should help encourage those looking to become their own boss in the future. Crucially, the changes announced demonstrate that Government understands the small business community is continually evolving, and requires updated business rate measures.
“It will mean firms coming out of the small business rate relief cap aren’t instantly hit with an added cost, which can put a strain on cash flow. For smaller businesses, it’s incentives like this that can help promote strong growth. Giving local authorities much needed extra resource to help some of our smallest firms is another important move in protecting the our SMEs, often referred to as the lifeblood of our economy. And quite rightly so.”
Reduction in corporation tax
Emma Jones, founder of Enterprise Nation:
“Once again small businesses and the self employed have proved to be an easy target for the chancellor’s revenue raising initiatives. If there was one over-riding message we were looking for, it was for some reassurance that the Government values our contribution to the economy and is not going to make life even more difficult for those running small businesses or hard-working self-employed individuals while Brexit uncertainty hangs over us like a political smog.
“We didn’t get that. In fact we got hammered. Again. It’s as though the government doesn’t understand the risk-reward ratio entrepreneurs need as an incentive to plough on through more and more red tape and an already considerable tax burden.
“Corporation tax reduction will massively benefit big business. Meanwhile the small business has to make do with less rewards for their hard work through the increase in dividend tax. Far from making Britain the best place to start and grow a business, this has made it harder and less rewarding.”
Justin Arnesen, director, R&D tax & grants, Ayming:
“It’s great to see Philip Hammond announcing policies that will reduce the administration overheads associated with R&D, but until we know what this means in practice, it’s hard to gauge the real impact.
“For a number of years, there has been a generally accepted standard on what constitutes R&D from HMRC’s perspective. In recent months, it feels as though the bar has been raised, but there has been a lack clear direction. Companies who have been involved in R&D incentives over the past decade are finding their applications are now being put into enquiry by HMRC with little explanation, and that is inflating the admin burden.”
On the £500m investment in tech, digital education and the new T-levels
George Brasher, managing director UK and Ireland, at HP:
“Today’s Budget marks a significant step forward for digital education in Britain. The chancellor has dedicated over £500m to help boost technical and vocational training, including IT skills, especially important as we prepare to exit the EU. IT skills are no longer a ‘nice to have’, they represent the knowledge and expertise that employers need and want, and will go a long way towards shaping the success of British businesses in the future.”
Petra Wilton, director of strategy and external affairs at the CMI:
“For the UK economy to punch above its weight post-Brexit we need to start ramping-up the number of young people entering the labour force with work-ready higher skills. That’s why CMI welcomes the Chancellor earmarking £500m a year to support 16-19-year olds in technical education.”
Adam Hale, CEO of Fairsail:
“£500m to spend on skills is a nice headline-grabbing figure, but it’s not nearly enough. Neither does it focus as much as needed on where we must radically improve skills – in IT. While maintenance loans are a step forward, we would really like to see more focus on the T in STEM (Science, Technology, Engineering, Maths) – we think it’s T-time!”
On confirmation of the £16m investment in 5G technology and £200m investment in broadband
Jason Downes, managing director of Powwownow:
“The government’s plans to roll out new, super-fast 5G and investment in fibre broadband across the UK, as outlined in the Spring Budget, are long overdue but greatly welcomed.
“The new 5G networks will drive forward the digital transformation of the workplace, enabling even smarter, flexible working to help drive the UK economy.”
On no mention of a small business commissioner
Dafydd Llewellyn, managing director of Concur:
“I was disappointed not to get a further update on the appointment of the small business commissioner. We’ve heard this position will be filled later this year, but who are the government interviewing?
“It would also have been good to have been provided with further details on the powers they will have, particularly when it comes to tackling the late payment epidemic that is crippling millions of organisations – an issue that should have been addressed as a stand-alone item in this budget.”