Spring Statement hits the right notes for SMEs
Chancellor Philip Hammond announced that he was on the side of small businesses in his Spring Statement, promising action on late payments, boosting funding for SME apprenticeships and bringing forward the next Business Rates revaluation.
The Spring Statement is no longer a big fiscal event but it still had a few surprises, not least the news that UK economic growth exceeded expectations in 2017, leading the Office for Budget Responsibility (OBR) to increase its forecast for growth this year to 1.5%.
That was the good news; the bad news was that the OBR has downgraded its growth projections for 2021 and 2022. That said, the UK's public finances have reached a turning point, said Hammond. In 2009-10 the UK borrowed £1 in every £4 that was spent; the OBR expects that we will borrow £1 in every £18 this year.
Key announcements included:
- Tax and VAT: The chancellor made a commitment to change the tax system to ensure digital businesses pay their fair share of tax. There will be a consultation on changes to the VAT system as a whole. The Government is looking at a new "VAT collection mechanism to ensure the VAT consumers pay actually reaches the Treasury".
- Apprentices: The Government will release £80m to help small firms recruit apprentices.
- Late payment: There will be a review into what Hammond called the "scourge of late payment".
- Entrepreneurs' Relief: There will be a consultation on changes to Entrepreneurs' Relief to ensure it does not discourage business owners from seeking external finance.
- Business rates: The next Business Rates revaluation, currently due in 2022, will be brought forward to 2021.
- Digital connectivity: The first wave of funding to help roll out full-fibre to local areas is being released, providing over £95 million for 13 areas across the UK.
- Digital payments: The Government is to launch a consultation on how it can support people and businesses that use digital payments, while ensuring that those who need to can pay with cash.
- Training: The Government is seeking views on extending the current tax relief to support self-employed people and employees when they fund their own training.
- Personal tax: As previously announced, in April 2018, the National Living Wage will rise to £7.83. National Minimum Wage rates for under-25s and apprentices will also rise. The tax-free personal allowance will go up to £11,850.
- Mike Cherry, national chairman of the Federation of Small Businesses (FSB), welcomed the fact that "the chancellor explicitly put himself on the side of the UK's millions of small businesses and self-employed".
Cherry also applauded the commitment to tackling late payments and praised the changes to Business Rates but said there was still need for "fundamental reform of a tax that bears no relation to the ability to pay".
Adam Marshall, director general of the British Chambers of Commerce (BCC), said: "Businesses will be encouraged by the chancellor's report on the UK's fiscal health, with lower projections for the deficit and falling national debt, as well as his full-throated defence of the market economy and the role of the private sector in delivering prosperity."
He added: "Given that businesses across the UK have long complained about constant tinkering with tax rates, the Statement's lack of tax and spending changes is welcome - and not before time. A clear annual cycle will mean fewer rushed policies and give firms the time they need to plan for any changes that come their way."
Source: StartupDonut