by Sellick Partnership | 30 October 2018
On Monday 29 October, 2018 the Chancellor Philip Hammond announced ‘austerity is coming to an end’ in a 72-minute-long speech that incorporated Universal Credit increases, a special tax for digital giants and equipment for schools.
We take a look at the top five elements that businesses should take from this year’s budget.
1. IR35 to be rolled out to the private sector
“Designed to ensure fairness”, IR35 is being rolled out to the private sector in a move that has worrying implications for the temporary sector. The update to the off-payroll working rules will see self-employed contractors, who work through their own company but are, in practice, employed by a third party, pay an increased amount of tax from 2020.
According to HM Treasury, the taxpayer could be missing out on up to £1.2bn a year by 2023 due to people incorrectly paying tax as if they were self-employed. There are fears that this change, which initially will only be applicable to large and medium-sized businesses, could stifle economic growth and place a huge strain on the UK’s contract and interim workforce.
2. Apprentice training fees halved for SMEs
Small business owners who offer apprenticeship training will welcome a reduction in the amount they have to contribute, down from 10 percent to 5 percent in training fees. This is part of a “£695 million package to support apprenticeships” and will come into effect for new starters from April 2019.
3. Entrepreneurs relief rules tightened
Conditions under which entrepreneurs can apply for relief have been tightened, with the minimum qualifying period extended from 12 months to two years. Before the Budget was announced, there were concerns that the Chancellor was planning to scrap the relief entirely. In his speech, Hammond said: “Encouraging entrepreneur members must be at the heart of our dynamic economy, so I will retain entrepreneurs relief.”
4. £675 million for the future of British high streets
A Future High Streets Fund has been promised by Hammond to help councils improve local high streets. Co-funded by the Government, the £675 million grant has been designated to help facilitate the redevelopment of high streets around the country in a move that will be well received by local business owners.
In addition, from April 2019, small retail businesses will have their business rate bills cut by a third for two years, saving them an estimated £900 million.
5. Annual Investment Allowance to increase five-fold
Businesses that are looking to invest and grow will benefit from a five-fold increase in the Annual Investment Allowance. The increase from £200,000 to £1 million will be available for two years, and businesses can apply from 1 January 2019.
The lifting of the allowance cap was announced as part of a package aimed at boosting businesses in a bid to show the world that, “Britain is open for business”. Other measures included targeted relief for acquiring intellectual property-rich businesses and export help through direct lending.
Finally, Hammond announced that employment is at a near record high and, according to the Office for Budget Responsibility (OBR) forecast, it is set to keep growing with 800,000 more jobs predicted by 2022. However, there was a noticeable absence of information on how companies will be supported in the development of these new roles, nor were any plans announced on how the government intends to help businesses recruit new talent when large numbers of the UK workforce inevitably leave after Brexit.
To discuss what the Budget could mean for your business please feel free to get in touch with me on firstname.lastname@example.org. Alternatively you can check out our Insights section for all our latest blogs, news and resources.