Announcing his first budget, Chancellor Philip Hammond said “I am listening to the voice of business”, and “Britain is open for business”. Here’s what the Spring Budget 2017 will mean for small businesses.
- Top 5 female-run startups to watch in 2017
- 7 things to do to start a business in the UK
- Royal Mail prices set to increase for 2017
- Why do I need business insurance?
State of the economy
The UK was the second-fastest growing economy in the G7 last year, losing out only to Germany. The Chancellor’s predictions have improved since the Autumn Statement, with the growth forecast for 2017 going from 1.4 per cent to 2 per cent.
Unfortunately, the GDP was downgraded to 1.6 per cent, though it should be up to 2% by 2020, and inflation is set to rise to 2.4 per cent across 2017-18.
Changes to tax
A large part of the budget covered tax changes over the coming years. The Chancellor announced a cap for businesses coming out of small business rate relief, so they won’t pay more than an extra £50 a month.
One of the biggest changes announced is National Insurance Contributions (NICs) for the self-employed. The main rate of Class 4 NICs is being put up from nine per cent to 10 per cent, with a further one per cent increase planned for the following year.
- Since we published this article, the government has scrapped the rise in National Insurance for self-employed workers. See our article on the NIC u-turn to find out more.
Acknowledging that central government is not always in the best position to distribute funding, Philip Hammond said there would be a 300 million fund for small businesses, shared out among local council to give out on a discretionary basis. Further details for this fund are yet to come.
Earlier this year it was announced that anyone who files a self-employed tax return would need to do so quarterly rather than annually under the new digital tax system, which will come into effect in 2018. However, today the Chancellor delayed the start date by a year for anyone under the VAT registration threshold.
And there’s good news for pubs. Any pub with a rateable value of less than £100,000 - which is 90% of all UK pubs, according to the Chancellor - will get a £1,000 discount on the rates they pay.
Alcohol and fuel duty
In further good news for pubs - or anywhere that sells alcohol - the duty on alcohol is not going to rise. The same is true of fuel duty, which in his Autumn Statement last year the Chancellor said would save the average van driver £350 a year, and the average car driver £130.
Research and development changes
While Philip Hammond praised the success of the R&D tax scheme, he did acknowledge that there was something of an ‘administrative burden’ around it. There will now be changes to at least partly relieve small businesses of that burden, as well as raising awareness of the R&D tax credit scheme.
Consumer markets green paper
Repeating a word he used throughout the Budget announcement, the Chancellor announced the Government will shortly be releasing a green paper to examine markets that are not ‘fair’ to consumers.
The paper will look at how businesses can be clearer with terms and conditions, as well as potentially seeking to penalise subscription services that auto-renew. We will have to wait and see exactly what the document will propose and what those propositions will mean for small business.
You can read the policy paper for the 2017 budget on the Government’s website.
What do you think of the budget? Let us know in the comments.
Looking for self-employed insurance?
With Simply Business you can build a single self employed insurance policy combining the covers that are relevant to you. Whether it’s public liability insurance, professional indemnity or whatever else you need, we’ll run you a quick quote online, and let you decide if we’re a good fit.