On Wednesday 22 November, Philip Hammond delivered the UK’s first Autumn Budget for 21 years.
With the uncertainty of Brexit and a very slim Government majority, the Chancellor wasn’t in a position to announce too many radical changes.
There are changes small business owners need to be aware of, here are the key points from the Autumn Budget 2017 likely to directly affect small business owners.
The UK Economy
With the uncertainty of the Brexit vote, growth has been slower than expected, the economy is forecast to grow steadily for the following years. The UK economy has seen a growth rate of 1.5%, significantly lower than the 2% that was estimated.
- Because of slower growth, borrowing is forecast to fall in the coming years
- Chancellor is providing an extra £3bn to prepare for Brexit over the next two years
In efforts to ensure that online retailers pay the same amount of tax as traditional retailers, the government will be ramping up on tax scrutiny and expect an extra £200m a year.
The personal allowances for 2018-19 is £11,850 (2017-18 £11,500). According to HMRC, this means that an average taxpayer will pay £1,075 less tax than in 2010-11.
Income Tax bands, rates and the dividend allowance
The Income Tax bands for 2018-19 have been increased. They are:
Basic rate band increased to £34,500 (2017-18 £33,500)
Higher rate band £34,501 to £150,000 (2017-18 £33,501 to £150,000)
Additional rate, no change, applies to income of more than £150,000.
Diesel car supplement increase
The diesel car supplement is to be increased from 3% to 4% from 6 April 2018. This will increase the company car tax and car fuel benefit charge (for company cars provided with an element of private use).
This change will apply to all diesel cars registered on or after 1 January 1998 that do not meet the Real Driving Emissions (Step 2) standards.
Business Rates changes
From April 2018, business rates will rise by any increase in the Consumer Price Index (CPI) rather than the Retail Prices Index (RPI). The change has been brought forward two years. Historically, the RPI has tended to be higher than the CPI.
Rates revaluations will now be undertaken every 3 years rather than the present 5 years. This will start after the next rates revaluation due during 2022.
National Living Wage
From April 2018, the National Living Wage, for over 25s, will increase by 4.4% to £7.83 an hour. Up from the current £7.50 an hour.
In recognition of the fact that small businesses are under great ‘pressure’ at the moment, the Chancellor announced that the VAT threshold for small businesses will not be reduced from the current £85,000.
In summary, the Chancellor offered a “balanced budget to prepare the UK to tackle the challenges of Brexit.”