Autumn Budget 2017: what small business owners need to know

The Autumn Budget 2017 posed some challenges for Chancellor Philip Hammond, as the self-employed listened carefully for announcements on the likes of VAT, business rates, and investment.

• Business rates rise: where UK small businesses will be hit hardest
• VAT registration: is it right for my business?
• HMRC increase collections from ‘easy target’ small businesses
• How much public liability insurance do I need?

It was unclear whether the Budget would include many measures for the self-employed, especially given the previous row over National Insurance contributions that forced the government into a u-turn. But the Autumn Budget 2017 contained a range of announcements that will affect the self-employed and small business owners through the coming years.

Here, we’ve put together a summary of the key points from Budget 2017 that could affect small businesses.

Overall economic outlook

The Chancellor made a number of announcements about the outlook for the UK economy. Some were cause for cautious optimism, while others will give the government worry in the coming years. The impact of Brexit will be felt more acutely than the Treasury had previously expected, but official forecasts suggest that debt levels and GDP will begin to recover within the next three years.

• The UK’s growth forecast has been cut to 1.5 per cent from two per cent
• GDP forecasts have been cut to 1.4 per cent, 1.3 per cent, and 1.5 per cent for the following years
• The annual CPI rate is forecast to fall to two per cent later this year
• The UK will set aside £3 billion for possible Brexit outcomes
• Borrowing is forecast to fall from this year on
• Debt will hit a peak of 86.5 per cent of GDP this year, and will fall in following years

Personal taxation

The personal allowance was expected to rise again this year, and it was confirmed that both the level at which taxpayers start paying, along with the higher rate threhold, would both increase.

The personal allowance increase may be particularly important for self-employed people working at the lowest end of the pay scale, and for those in the very earliest stages of establishing their businesses.

• The tax-free personal allowance will increase to £11,850 from April 2018
• The threshold at which taxpayers pay the higher rate will rise to £46,350 from next year

Business tax

VAT was a looming question coming into the Autumn Budget 2017. There was some concern that the VAT threshold could be dramatically reduced, forcing many more small firms into the VAT regime. However, this change did not materialise.

Other changes announced by the Chancellor included a shift in the way business rates are calculated, and a change to R&D tax credits.

• The VAT threshold will be frozen at £85,000 for at least two years
• Business rates will be indexed to CPI from next year, which could see a rates reduction of around one per cent
• After the next revaluation, business rates revaluations will occur every three years
• The main R&D tax credit rate will be increased to 12 per cent

Chancellor: we’ll extend the £1,000 discount for pubs with a rateable value of less than £100,000 for 1 more year to March 2019 #Budget2017 pic.twitter.com/YlIrhspXk7

— HM Treasury (@hmtreasury) November 22, 2017

Vehicle tax

Tax on diesel vehicles could cause problems for tradesmen, but there was a welcome exemption announced in Autumn Budget 2017 for van drivers. In addition, there was good news regarding the scheduled fuel duty rise.

• Excise duty for older diesel cars will rise from April 2018, but van owners will be exempt
• The scheduled April 2018 fuel duty rise for both petrol and diesel cars has been scrapped

Business investment

The government is keen to demonstrate investment in British companies, especially at a period during which the UK needs to remain as competitive as it possibly can. There were measures in the Budget to help UK SMEs and also larger businesses carrying out research and development to this end.

There was also an announcement regarding UK employees’ digital skills, which will be improved through a retraining scheme.

• The government has set aside £2.3 billion for investment in R&D
• The British Business Bank will receive a funding boost, unlocking £13 billion to fund UK SMEs
• The Chancellor confirmed the introduction of a national retraining scheme focusing on digital skills and construction
• It is thought the Enterprise Investment Scheme will be expanded to make investment in scalable tech business easier

Wages

The National Living Wage, which has replaced the Minimum Wage, was the subject of an increase in the most recent Budget. The change could affect employers across the UK, including small businesses.

• The National Living Wage will increase by 4.4 per cent to £7.83 from April 2018

Infrastructure investment

Finally, the Chancellor announced a range of new initiatives intended to improve infrastructure across the UK both for private citizens and for businesses. The measures include investment in 5G and broadband, and new transport help for city regions.

• There is a new £500 million fund for 5G mobile and fibre broadband
• A further £540 million will be invested in electric cars and charging points
• £1.7 billion has been set aside for transport in city regions

Do you think the Budget is good for small businesses? Let us know in the comments.