‘Overall, this is a business-friendly Budget,’ said Mike Cherry, national chairman of the Federation of Small Businesses. Do you agree?
Here are the key points from Chancellor of the Exchequer Philip Hammond’s Autumn 2017 Budget that are likely to affect small businesses in Winchester.
Mr Hammond said he realised small businesses are under great “pressure” at the moment. Increasing the National Living Wage by 4.4pc from £7.50 an hour to £7.83 from next April, excellent as it is for people on low pay, didn’t immediately strike one as helpful to small businesses for whom the wage bill is one of the biggest items of expenditure.
Business rates are another major expense so businesses will be relieved that Mr Hammond is bringing forward to April 2018 the uprating of business rates based on the CPI inflation index as opposed to the higher RPI used at present. There will be three instead of five yearly property revaluations which should prevent large hard-to-plan-for swings in ratable values.
The good news is he will not reduce the current VAT threshold of £85,000 for two years. This is a relief for all those businesses who feared it might drop as low as £25,000. The bad news is he will not reduce the current VAT threshold of £85,000 for two years. Therefore an estimated 4000 businesses will be registering in the coming year and no doubt feeling greater ‘pressure’.
The Chancellor acknowledged the importance of investing in knowledge intensive businesses. EIS investment limits for such companies will be doubled. There has been a lack of venture capital investment when those businesses want to scale up. In future, if your knowledge intensive business is growing, you may benefit from some of the £20bn of new investment the Chancellor intends to ‘unlock’. This includes a new fund in the British Business Bank seeded with £2.5bn of public money.
One announcement by Mr Hammond came as a particular relief to Hampshire Workspace and some of our clients. Following a Supreme Court decision last year, a so-called ‘staircase tax’ meant that companies who had more than one office on different floors in multi occupied buildings like ours could only claim small business rates relief on one of them, as each had to be assessed separately. The reason given was that the corridor or stairs that separated them were used by other businesses.
Nearly all our clients occupy just one office and don’t pay business rates but we still this ruling was unfair since a company occupying the same space but in one large office or two linked offices was assessed (and given small business rates relief) on all their space. So, thank you, Mr Hammond, for righting this wrong and promising legislation to reinstate the previous situation.
The government is eyeing up businesses that trade through online marketplaces to make sure HMRC gets all VAT due on UK sales. If the seller doesn’t pay it all, the marketplace will have to pay it instead. So you can be sure, if you want to sell online in a marketplace, you’ll be jumping through a lot of hoops to prove you pay your taxes.
Even at Hampshire Workspace where an uncontended broadband supply gives our clients a fast internet connection, we are aware that a good online speed is essential to a successful business. With fibre not available everywhere, the Chancellor’s investment in the development of 5G means it could be a viable alternative.