Budget Breakdown For Small Business

Here at CAN Solutions we’re all about helping business of all sizes save money, however much focus has been placed of late on protecting and nurturing new and growing small businesses to help the economy to continue to recover.

So what did Philip Hammond’s budget mean for the masses and will it truly mark the start of some new cost saving initiatives? We’ve rounded up some of the reactions and summaries of the main points for you to digest.

In Anna Delves’ article for Simply Business she pulls out the key information of interest to small businesses:

Personal tax allowance

Personal tax allowance is the amount you are allowed to take home without paying tax. Anything you earn above that is taxable at a varying rate dependant on your total income.

The chancellor announced that personal tax allowance will be raising to £12,500 for basic rate tax payers, and £50,000 for higher rate tax payers in 2019.

A cash injection for Britain’s ailing high streets

If you’re a bricks and mortar shop, the Chancellor’s proposed Future High Streets Fund may well be of interest to you.

In the Budget, Philip Hammond announced £675 million worth of co-funding for local councils to plan the future of their high streets.

He suggested this could include converting commercial premises into residential ones to increase footfall, and claimed that while it could take time to adapt, the rise of online shopping meant that the changes we’ve seen in recent years is irreversible.

Up to £8,000 of savings for independent businesses

The Chancellor also declared he will be cutting the business rates bill for the smallest of small businesses. Businesses with a rateable value of £51,000 and under will see their bill cut by a third over a two-year period.

According to the Budget announcement, this will lead to up to £8,000 worth of savings.

WILL THE NEW DIGITAL SERVICES TAX IMPACT SMALL BUSINESSES?

Ahead of the Budget, there was a lot of talk about a digital services tax, which had some online retailers worried about their position.

However, the tax announced in the budget will only apply to businesses that generate millions in global sales, but it remains to be seen whether this tax will have an impact on businesses that sell through sites like Amazon and Ebay.

GREEN TAXES ON UK SMALL BUSINESSES

While the Chancellor made mention of the environment in his Budget announcement, there was only one tax announced – companies manufacturing plastic that is less than 30% recycled material will face a levy.

He also said that he had considered a plastic cup tax, but decided that it wouldn’t make a substantial change. He will, however, continue to monitor progress, and may introduce another tax if things don’t improve.

While this is some of the biggest news that will impact small businesses in the UK, the Chancellor announced a number of other measures you might want to keep your eye on. These included:

• Annual investment allowance will be increased from £200,000 to £1 million for two years

• Small businesses will now only have to contribute five per cent to the apprenticeship levy

• New mandatory business rates relief for all toilets made available to the public, whether publicly or privately owned

• A £30 billion package for England’s roads, including repairs to bridges and potholes

• Fuel duty will be frozen for the ninth year in a row, saving car drivers around £1,000 and van drivers around £2,500

• Beer, cider and spirits duties will be frozen, though wine duty will rise with inflation and tobacco duty will continue to rise by inflation plus two per cent

• The Greater Manchester area will see a new fund to help small businesses improve their skills

• The VAT threshold won’t change

• The national living wage will increase to £8.21

Other commentary from small business organisations are overwhelmingly positive:

Mike Cherry, national chairman of the Federation of Small Businesses said: ‘This is the most small business-friendly budget that this Chancellor has delivered.

‘He has listened to our requests across many areas of tax and public policy, putting him firmly on the side of Britain’s small businesses.’

Emma Jones, founder of small business support group Enterprise Nation, praised the Treasury’s decision not to slash the threshold at which businesses would become VAT registered.

She added: ‘Moving the threshold now would have a knock-on effect on Making Tax Digital which starts in April for VAT-registered businesses, so that’s a bullet dodged for our members, at least for the meantime.’

SELF-EMPLOYED CONTRACTORS

In April 2017 the Government introduced new rules – known as IR35 – to crack down on public sector workers paid through personal service companies, who worked for just one client and employed just one person, effectively making them an employee.

These companies were criticised for years as a tax dodge that allowed contractors to pay significantly less income tax and national insurance.

It also saved the companies paying these employees vast amounts in employers’ national insurance contributions.

The introduction of IR35 meant that it was left up to public-sector employers to determine whether national insurance contributions and income tax applied to the self-employed contractors working for them.

The reform was widely expected to be extended to the private sector, however, the Chancellor confirmed that smaller firms will be exempt from the rule change, while medium-sized and larger businesses will have to adapt by April 2020.

Julian Sansum, employment tax partner at PwC, said: ‘Having a single set of rules for taxing contractors in both the public and private sectors is a sensible step, but the impact of these reforms should not be underestimated, and arguably represent the most significant changes to the operation of employment taxes for many years.

‘There will be direct cost implications for businesses which decide their contractors fall within the IR35 rules, largely driven by employer national insurance contributions and the apprenticeship levy totalling 14.3 per cent which will be chargeable on contractor fees.

‘In addition, businesses will need to make the necessary changes to their systems and processes, which could be complex.’

That all adds up to some significant changes and opportunities for small businesses to benefit from savings. Why not now take the time to review your costs on your business communications and energy supply? We can offer a full, no obligation review of your spend.