Budget 2017 began in a similar vein to the autumn statement of 2016, with Phillip Hammond emphasising the government’s plan to make Britain the best place in the world to start and run a successful business. The chancellor placed special emphasis on the country’s growing productivity, and reiterated his stance on supporting enterprising small businesses, which he later referred to as “the lifeblood of our economy.”
But what kind of measures has the government introduced to pursue this goal, and how might these impact on small businesses? Here, we list some of the key announcements SMEs need to take away from budget 2017.
In the wake of mounting pressure from UK businesses for the government to rethink its stance on business rates, the chancellor announced a number of tax relief measures for those likely to be hit hardest by the upcoming business rates increases, which we reported on as part of our recent SME news round-up.
In an effort to mitigate the impact of the business rates increase, Mr Hammond announced a three-point support package which the government hopes will alleviate any anxiety felt by those in the business community. These measures include:
In a bid to improve economic parity between employed and self-employed workers, the government announced a National Insurance Contributions (NICs) increase for the self-employed. From 1 April 2018, self-employed workers with a Class 4 NIC profile will see a 1% increase in their tax bill, which will then rise by a further 1% from 1 April 2019.
According to Hammond, the 1% increase for Class 4 NICs will raise £145 million in tax revenue, which will be used to support cash-strapped public services. This comes at an average cost of around 60p a week for those affected and, the chancellor states, will help to improve fairness and bring the self-employed in line with those in employment.
Responding to businesses’ concerns about the imminent rollout of the Making Tax Digital scheme — which aims to digitise how businesses pay for tax and make other common transactions — the government has announced an additional 1-year time window for businesses below the VAT registration threshold to properly prepare for the Making Tax Digital programme, which will now become compulsory for all businesses from the 1 April 2019.
Since the scheme was announced as part of the March Budget 2015, the government has faced criticism from some within the business community, who fear that modernising the tax system could potentially alienate small business owners who lack the skills required to keep up to date with their tax records online.
For businesses concerned by the Making Tax Digital scheme, the government’s announcement to delay the programme’s introduction date by an extra year is sure to come as positive news.
As promised in the 2016 autumn statement, the government is forging ahead with its plans to invest £23 billion in the National Productivity Investment Fund, with the chancellor announcing plans to create a new 5G mobile technology hub worth £16 million.
Improving the UK’s digital infrastructure is a big part of the government’s economic strategy, and a fundamental aspect in attracting businesses to setup shop in Britain. As well as the new 5G data network, Mr Hammond also confirmed that the government is investing £200 million to help local projects build reliable, super-fast fibre broadband networks — helping businesses and households alike access high-speed internet regardless of where they live.
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