Budget 2017: The announcements small business owners need to know
With an emphasis on productivity, the chancellor has revealed the government's economic plans. Here's what entrepreneurs should watch out for...
In his first (and last) spring budget, chancellor of the exchequer Philip Hammond asserted that the report was the foundation from which the government will “prepare Britain for a brighter future”.
With a signature emphasis on increasing productivity – a key element of 2016’s autumn statement – Hammond began by reiterating his goal of “ensuring the UK is the best place in the world to start and grow a business”, later sharing intentions to support “entrepreneurs and innovators, who are the lifeblood of our economy”.
But what measures has the government introduced for this purpose?
Read on for our round-up of the key policy announcements that entrepreneurs and small business owners need to be familiar with…
Business rates relief measures
In response to feedback from those who will be hit hardest by upcoming business rate hikes, Hammond promised that the business rates revaluation process will be reformed to become smoother and more frequent, with the goal of avoiding such dramatic increases in future.
To aid the small businesses affected, Hammond introduced three measures: a cap which will ensure that businesses losing small business rate relief will see their bills increase by no more than £50 per month next year; a £1,000 discount for all pubs with a rateable value of less than £100,000 (which Hammond stated amounts to 90% of UK pubs); and a £300m fund allowing local authorities to help “hard cases” in their areas.
For all you need to know about upcoming changes to business rates, click here.
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Rise in NI tax for self-employed workers
In a measure intended to reduce the difference in taxes paid by employed and self-employed people, National Insurance contributions (NICs) are set to rise for self-employed workers. While Class 2 NICs will – as previously announced by the government – be abolished, Class 4 NICs are set to increase for self-employed workers, rising from 9% to 10% in April 2018, and increasing by a further 1% in 2019.
Hammond stated that self-employed workers earning profits below £16,250 will still see an overall reduction in their NICs bill.
Green paper on protecting consumers
The government will publish a green paper investigating ways to protect consumers from inefficiencies and unnecessary costs by preventing unexpected fees, simplifying terms and conditions, and fining companies that do not treat consumers with honesty and fairness.
Efforts to close the skills gap
To raise the status of technical education and contribute to closing the skills gap, Hammond announced that T-Levels – qualifications for 16-19 year-olds pursuing technical subjects – will be introduced from Autumn 2019. Participating students will enjoy a 50% increase in training hours and a three-month work placement to ensure that they are “work ready” as soon as they finish education. Maintenance loans will also now be available for students doing higher-level technical courses at colleges.
£270m will be invested into groundbreaking technology research programmes, ensuring the UK is at the forefront of developing disruptive new technologies including biotech, robotics and driverless vehicles. A further £90m investment will see 1,000 new PhD places created for students pursuing STEM (science, technology, engineering and maths) subjects.
Tax-free dividend allowance reduced
In further efforts to reduce tax differences – this time those between the self-employed and those employed through their own company – tax-free dividend allowance will be reduced from £5,000 to £2,000 from April 2018.
Corporation tax reductions confirmed
Following his confirmation in 2016’s autumn statement, Hammond reiterated in today’s budget that corporation tax rates will indeed fall to 19%, and will again drop to 17% in 2020.
Learn more about corporation tax with Startups’ free guide.
R&D Tax Credits
To help support business innovation, the government will look to reduce the administrative burden around claiming R&D tax credits. Hammond also revealed that the Industrial Strategy Challenge Fund (ICSF) will invest an initial £270m in 2017-2018 on projects to speed up development of “disruptive technologies that have the potential to transform the UK economy”.
Extra preparation time for Making Tax Digital
Small businesses and landlords which have an annual turnover below the VAT registration threshold will now have an extra year to prepare for Making Tax Digital, with the new process becoming compulsory for those businesses in April 2019.
Improvements to digital infrastructure confirmed
In the autumn statement, Hammond announced plans to enhance productivity by improving the digital infrastructure. Today, he confirmed plans to invest £16m to create a new 5G mobile technology hub, and plans to provide a £200m fund to enable local projects to build fast and reliable full-fibre broadband networks across the country.
Investment in transport infrastructure confirmed
Using its £23bn National Productivity Investment Fund (NPIF), which Hammond initially announced in 2016’s autumn statement, the government is funding new local transport initiatives with a £690m investment, and providing £220m to help improve congestion points on roads across the country, with the Midlands receiving £23m and the North receiving £90m.