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Spring Budget Digest

Date March 17th 2017 by in Category Risk Management

It’s been a week since the Chancellor presented the Spring Budget 2017 we have had a chance to look at the impact on business owners and managers in the SME space. Whilst the Budget did not bring about any radical changes there are few items of note. Namely, changes to business rates and minor relief for publicans, investment in the adult care sector, a simplified R&D scheme and investment in telecommunications infrastructure and connectivity.
 
Previous budgets made changes to the way that business rates are calculated and consequently 300 million businesses are facing an increase in business rates payments. The Spring Budget announced a number of measures to provide business rate relief for smaller businesses who would otherwise struggle to meet the increases. The highlights of the changes are as follows:
 
  1. Any business coming out of small business rates will benefit from capped payments which prevents the rate that it pays from going up by more than £50 per month
  2. Pubs with a rateable value of less than £100,000 (estimated to cover 90% of pubs in England) will receive a £1,000 discount on the business rates they pay
  3. Local authorities will receive a £300mn hardship fund providing discretionary relief to small businesses worst affected by the rates changes
In total, this equates to a cut of £435bn in business rates. The discounts available to publicans has been met with cynicism throughout the hospitality industry as many feel that this is not enough and fear that they will simply receive hikes in other areas as the Government attempts to recoup funds. 
 
Another area that was singled out for relief was the care sector, where Mr Hammond announced that the Government will invest an additional £2bn for adult social care. As explained by Jackie Brook from Care Industry News this is a welcome boost to a system that stands on the “brink of collapse” without an immediate cash injection and commitment to a long-term solution.
 
It came as a surprise to many that the Chancellor had little to say about the energy market, except to pledge support for oil and gas production in the North Sea, unveiling new measures to review tax relief and maximise the exploitation of remaining reserves. This has been deemed a short-sighted approach by experts in the industry as it does little to tackle the long-term problem of diminishing sources of energy in the UK. Renewable alternatives were not mentioned and there was little discussed by way of energy efficiency, the emissions plan or the 25-Year Environment Plan.
 
With regards to the telecoms market place, we were heartened to see that the Chancellor pledged £16m investment for a 5G mobile technical hub and investment of £200mn in fibre broadband. We hope that this will speed up delivery of the national roll out of superfast broadband, allowing businesses in remote areas to benefit from all that seamless online connectivity has to offer.
 
Prior to the Spring Budget announcement there had been a lot of talk and indeed lobbying due to the administrative burden of the planned MTD (making tax digital) project which will require business tax information to be submitted online on a quarterly basis. The deadline was originally scheduled to start in April 2018 with the first quarterly update being submitted in July 2018. As part of the recent budget, the Chancellor announced a deferral in the start date to 2019 for self-employed businesses and property landlords with gross income below the VAT registration limit.
 
Those businesses in the manufacturing industry or other areas where innovation and development is commonplace should be aware of reduced admin surrounding Research and Development tax scheme and be aware that a review of the tax credit scheme will be put in place. It is not yet clear what the measures will consist of but it was evident that the Government will be doing more in future to enhance awareness of tax relief available for R&D projects.
 
The over-arching message to businesses throughout the budget was an ambition to boost productivity and growth within the UK and to quote the Chancellor, "make Britain the best place in the world to do business". 
 
Your accountant should be able to provide you with further information on how the recent budget announcements will impact your business. Our network includes links to a number of accountants and financial experts so please call us on 03330 433 233 if you would like to be put in touch with an expert.
 
For further reading, please see below sources: 
 

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