On March 8, Chancellor Phillip Hammond announced several changes that will affect British businesses as part of what was billed in some areas as an “upbeat” Spring Budget 2017. Here are the main modifications that affect businesses:
Addressing the skills shortage
There was a commitment by the chancellor to improve technical skills and invest in development and research. This has been welcomed by business leaders, with the Federation of British Industry saying:
“This is a breakthrough Budget for skills. There has never been a more important time for the UK to sit at the global top table of technical education for young people.”
Rates relief
The chancellor promised to help businesses hit by the recent increase in business rates. He pledged that no business that loses its small business rates relief will lose more than £50 a month. Pubs are to get a £1,000 rates discount.
A £300m fund is being set up to enable local councils to provide discretionary rate relief for business that are struggling to pay their business rates. This will target pubs, shops and cafes.
Tax
The income tax thresholds have been raised and a minority of workers will pay less tax.
Dividends
The total amount that directors and shareholders can receive in tax-free dividends is being reduced from £5,000 to £2,000.
Self-employed national insurance
An interesting U-turn was performed by the Chancellor when he announced hikes in national insurance contributions for the self-employed, only to scrap the idea a week later.
The idea was for Class 4 national insurance contributions to be raised to 10%, and then 11% in April 2019, but these plans were shelved on March 15.
What was the reaction?
Many business organisations have criticised the Budget for not doing enough for businesses. The Institute of Directors said:
“Business leaders will applaud the long-term focus on improving technical skills and investment in research and development, but the business community will have hoped for much more support in the immediate term, especially amid such economic and political uncertainty.”
The British Retail Consortium, meanwhile, described the rate relief as a “drop in the ocean”, saying:
“This is yet another sticking plaster on a chronically ill patient – an unsustainable property tax higher here than anywhere in the developed world.”
Applying the changes
To make sure that your business complies with changes announced in the Budget, consult a management accounting service that can deal with all your business’ finances.