Thu, 09 Mar 2017 | BUSINESS NEWS
The Chancellor has just delivered the government’s last ever spring Budget. “My ambition is for the UK to be the best place in the world to start and grow a business,” Philip Hammond said.
Announcing a range of policies on business rates, tax reform for the self-employed and investment in IT infrastructure, there was plenty in the Budget for companies. Here we round everything up and give you the reaction from business groups.
The state of the economy
The UK was the second-fastest growing economy in the G7 in 2016.
Economic growth for this year upgraded from 1.4 per cent to two per cent.
Employment at a record high of 31.8 million people.
A rise in business rates comes into effect in April with many firms warning the spike could put them out of business.
In response the government has announced extra help for small businesses and pubs.
90 per cent of pubs in England will get a £1,000 discount.
Small businesses coming out of rate relief will have increases capped at £50 a month.
Councils will also get a £300 million hardship fund to help “individual hard cases” in their local areas.
Small businesses with turnover below the VAT threshold will have an extra year to prepare for Making Tax Digital - the digitisation of the tax reporting system which will require firms to use online software to keep tax records and update HMRC quarterly.
Raising National Insurance for the self-employed - later dropped
The Budget announcement that has proved the most controversial.
Class 4 National Insurance contributions for the self-employed will rise from nine per cent to 10 per cent in April 2018, then to 11 per cent in 2019.
This means 2.5 million self-employed workers will pay an extra £240 a year.
On March 15 the government rowed back on the plans with Mr Hammond saying the government would not proceed with the increases. He had been heavily criticised for breaking a 2015 manifesto pledge.
Changes to the total tax paid by an employed worker and by one who sets up their own company.
The tax-free dividend allowance for directors and shareholders will drop from £5,000 to £2,000 from April 2018.
Investment in 5G
New strategy to make the UK a “world leader” in 5G technology.
£16 million for a national 5G Innovation Network to trial new 5G technology.
£200 million for local projects to build “fast and reliable” full-fibre broadband networks.
“The Chancellor’s recognition of the challenges posed by business rates through increased transitional relief for smaller businesses, is welcome.
“But there is no immediate prospect of more frequent valuations, or broader relief from rising business rates in a world of higher inflation, which businesses were looking for.
“Over the longer term, firms want to see a wider reform of business rates as part of the Chancellor’s efforts to create a more modern tax system.”
Carolyn Fairbairn, director-general of the Confederation of British Industry.
“This measure is a tax grab on middle income self-employed people, who are just about managing. Class 4 National Insurance contributions will apply from about £8,000 to £45,000 in profits. Millions of self-employed will now face this tax hike, including plumbers, hairdressers, designers, musicians and many others in all our local communities.”
Mike Cherry, national chairman of the Federation of Small Businesses.
“The 60% cut in tax free dividend allowance will hurt those businesses already dealing with increases to the taxation of dividends and uncertainty around IR35.
“From April 2018, the tax free dividend allowance is being cut from £5,000 to £2,000, in the Chancellor’s words, “to reduce the tax differential between the self-employed and employed”. This allowance was a measure only introduced last year, and the constant tinkering will damage business confidence.”
Jordan Marshall, policy development manager at IPSE.
“The £16 million for a 5G hub and £200 million for local authorities to stimulate private investment in fibre networks for world class digital connectivity should be applauded.”
Charlotte Holloway, policy director at techUK.
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