Sometimes the Chancellor's Spring Budget doesn't contain much for small businesses to worry about. Other times it's a case of 'all change'. So what did Philip Hammond's plans deliver this time, and how might they affect your small business? Read on to find out more about a Budget that was immediately accused of picking on small business and entrepreneurs.
Does the latest Budget affect your business rates?
For some time small businesses have struggled to meet sky high business rates, with many feeling they are unfairly burdened and that the financial demands of the exchequer are preventing them from growing. The latest Budget tackled the matter in three ways.
First, if your business doesn't get small business rate relief, your bill won't increase more than £50 a month. 90% of local pubs will enjoy £1,000 off their bill. And there's a new £300 million fund for local councils, so they can offer help to hard-hit small businesses in their area. All of which is great, but it does make you wonder why they didn't just cut the rate back to a reasonable level for everyone and have done with it.
Mr Hammond made it clear he can't abolish the business rates since they generate £25 billion a year for the government. But he did say there will be a 'consultation' on the matter, something that business leaders will be pushing him to deliver on, to keep up the momentum.
Britain was the second fastest-growing G7 economy in 2016, but Mr Hammond said there was no room for complacency as far as balancing the economy is concerned. The deficit has reduced, but the nation's debt is still far too high and productivity is still limping along.
Having said that, he predicted 2% growth for 2017, up from a previous prediction of 1.4%. He cut GDP predictions down to 1.6% for 2017, 1.7% for next year and 1.9% for 2019, rising to 2% in 2021-22. Inflation predictions also changed, forecast to go up just under two and a half percent in 2017-18 then 2.3% in 2019 and 2% in 2020.
How does the latest budget affect pensions and savings?
The Chancellor caused a storm by announcing that there's an 'unfair discrepancy' between the tax paid by traditionally-employed people and those who set up limited liability companies. He's going to cut the tax free dividend allowance for directors and shareholders from £5,000 to £2,000 from April 2018.
What's the latest news on personal taxes?
When the Budget was announced, there were plans to deal with the phenomenon of reduced National Insurance contributions from the self-employed, which is set to the cut public finance coffers by a whopping £5 billion in 2017 alone. Mr Hammond wanted to increase Class 4 NI contributions for self-employed people by 1% to 10% from next April, and again to 11% from April 2019. He reckoned it would generate a cool £145 million a year by 2021-22 and cost people an average extra 60p a week.
While he said this will make things fairer by bringing the self-employed in line with employed people, many self-employed workers are furious because they already have to meet the cost of their own holidays, don't get sick pay and miss out on various other benefits that employed workers enjoy.
The Chancellor's plans have subsequently been dropped after widespread criticism that the plans broke the Tory Party's 2015 manifesto pledge. Now it looks like there will be no increases in NI rates for the remainder of this Parliament.
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