Chancellor of the Exchequer, Philip Hammond, took to the podium this lunchtime to deliver his first official Autumn budget which he promised was going to be about “much more than Brexit”. Unsurprisingly, big-hitters such as housing, public sector pay, and the controversial Universal Credit rollout featured heavily. But what did the Budget have in store for business owners and self-employed individuals across the country and how will these changes work going forward? Here we take a look at the key measures set to affect company directors and sole traders.
- Productivity and Technology - The Chancellor’s first set of announcements were centred on productivity and technology. He opened by stating that a new high-tech business is founded in the UK every hour; he wants that to be every half hour. In order to facilitate with this desire, Hammond introduced a series of funding measures to assist with raising productivity. These include a revision of the National Productivity Investment Fund which promised £23billion over five years. This will be extended for a further year and increased to £31 billion.
Also promised was an investment of over £500million spread across a range of initiatives including 5G, full fibre broadband, and AI. Also announced was a £2.3billion investment in R&D and an increase of the R&D tax credit to 12%.
- Business Rates - Hot on the heels of a massive backlash following the revaluation of business rates in April, the Chancellor has scrapped plans to increase business rates in line with the Retail Price Index (RPI). This would have meant businesses being faced with a 3.9% rise in April next year. Instead future annual rises will be linked to the Consumer Price Index (CPI), which currently stands at 3%.
To help with the burden of business rates, the £1,000 discount offered to pubs with a rateable value of less than £100,000 will be extended for one more year. Shorter revaluation periods will also apply in future. Currently every five years, this will be reduced to a three yearly exercise following the next revaluation.
- Staircase Tax – The law will be changed on staircase tax, which charges businesses more if they trade from multiple floors in a mixed use building. Businesses who have been affected by this tax will be permitted to have their original bill reinstated and backdated.
- Housing – Hammond introduced a host of measures in an attempt to boost Britain's housing stock, which will benefit not only purchasers, but will also hopefully help to invigorate the construction sector. These included a promise to underwrite loans and guarantees worth £44billion to construction firms over the next 5 years, new money for the Home Builders Fund to help SME housebuilders, and £34million to develop construction skills.
- Personal Tax Allowance – Those on PAYE will welcome the Chancellor’s decision to accelerate the process of increasing the personal allowance to £12,500 by 2020. From April 2018, the personal allowance will go up to £11,850. The 40% higher tax rate threshold is likewise due to increase; this will be raised to £46,350 effective from April next year.
- National Living Wage – The National Living Wage will be increased from its current level of £7.50 to £7.83 from April next year. This represents a 4.4% increase for some of the country’s lowest paid workers.
- VAT – In a welcome announcement, the Chancellor confirmed the VAT threshold would remain at £85,000 for the next two years, despite rumours prior to the Budget which hinted this may be lowered. This will be a welcome announcement for Britain’s small businesses that may have feared the worst.
- Fuel Duty – Hammond confirmed the proposed fuel duty rise has been cancelled for another year in a welcome move for small businesses and individuals alike.