After Hammond’s spring budget was met with little welcome from UK SMEs, there was much anticipation around what might be pulled out of the bag this time around. But having already been described as “boring”, “tempered” and “gloomy”, this autumn’s budget looked a little depressing from the outset.
Brexit was always going to play its part, and it’s true that a lot of the budget reflects this; a slashed forecast in growth down to 1.5% and revised lowering of business investment estimates are a clear indication of the economic uncertainty hanging over the UK at the moment.
But it’s not all doom and gloom – for techs, start-ups and scale-ups for example, the new budget offers optimism and potential for opportunities within the post-Brexit market. And then of course there’s the eradication of stamp duty for first-time house buyers purchasing a home for under £300,000 – a welcome move for many who have been struggling for so long to get onto the property ladder.
But aside from all this, what do these changes really spell for businesses right here in the UK? We’ve sifted through the proposals to bring you the key details of how the budget might impact on your business.
A win for SMEs?
After the spring budget was viewed by many as a direct attack on small and medium-sized businesses, Hammond has made some efforts to try and win them over with the autumn budget. Concerns about the VAT threshold have been acknowledged, and small businesses previously exempt from VAT tax will remain so.
Tax evasion crackdown
The government continues its pledge against tax dodgers, promising to tackle VAT evasion, particularly by online overseas sellers. It will remain to be seen whether the measures work to raise the proposed £4.8bn by 2022-23.
No more staircase tax?
For thousands of small businesses with more than one storey in their office, the staircase tax posed a real threat, but the Chancellor has chosen to go back on this and reinstate original business rates bills.
A boost for innovation
With the post-Brexit period looming, innovation will increasingly become a focus. As a result, £2.3bn investment has been pledged with a boost to the R&D tax credit, moving towards the target of spending 2.4% of GDP on R&D by 2027.
Economic growth looking pessimistic
One of the key takeaways from this autumn’s budget was the gloomy outlook for economic growth; revised forecasts lowered for the next 4 years, poor productivity and growth slashed from 2% to 1.5% isn’t good news but no doubt much of this uncertainty is caused by Brexit.
Rise in basic rate income tax
The basic rate income tax threshold is set to rise to £11,850 from April, and the 40% threshold to £46,350, in line with the government pledge to increase basic rate to £12,500 by 2020. The National Living Wage is set to rise too by 4.4% to £7.83 by April 2018.
VAT threshold remaining
The VAT threshold for small businesses will remain at £85,000 for 2 years and, rather than lowering the threshold at which businesses start having to charge VAT, a consultation will instead be launched to look at the issue.
This budget was always going to be a difficult one in which to strike a good balance; slowing economic growth, the uncertainty of Brexit, and a need to reduce deficit set the goal posts right from the start. But amongst the doom and gloom of some of the more depressing budget headlines, there are some key legislative announcements that could stand to benefit many SMEs in the long run.
If you have any queries about the budget, and what it means for your business, get in touch with us at Chippendale and Clark to discuss your circumstances in greater detail.