There was little that was obviously eye-catching in Chancellor Philip Hammond’s first Budget, but his announcements may have significant implications for the self-employed, entrepreneurs and business owners, according to Cirencester-based McGills Chartered Accountants.
Class 4 National Insurance Contributions will rise for the self-employed from nine per cent to 10 per cent from April 2018 and to 11 per cent from April 2019, closing the gap with the contributions made by employees, but with no guarantee that the gap in employment rights and benefits will be narrowed.
Business owners were similarly hit with a reduction in the tax-free dividend allowance from £5,000 to £2,000 set to come into effect from April 2018.
Simon Nuttall, Partner at McGills Chartered Accountants, said: “Self-employed individuals, entrepreneurs and business owners are set to take a real hit, but with little by way of a quid pro quo in terms of employment rights or benefits from the government.
“That said, confirmation of reductions in Corporation Tax, which will fall to 17 per cent by 2020, and an increase in the higher rate threshold for Income Tax are to be welcomed.”
Speculation before the Chancellor rose to his feet suggested that he might review the current business rates regime, but that rabbit did not come out of the hat.
Many businesses, including local shops, are set to lose out following the most recent revaluation exercise, while businesses with large out-of-town premises will see a reduction in their bills.
The Chancellor instead announced £435 million of support for businesses facing increases in their business rate bills from April this year.
This includes a discretionary scheme, administered by local authorities, which will see £300 million made available for the hardest-hit businesses.
Simon Nuttall said: “It was disappointing not to see more done to protect the businesses that have been hardest hit by revaluation. Some businesses with town centre premises are still set to lose out significantly and the Chancellor should have looked again at this.”
A key announcement that many small businesses and sole traders will welcome is a one year delay from 2018/19 to 2019/20 in the implementation of HM Revenue & Customs’ Making Tax Digital for businesses below the VAT threshold – which itself is set to increase from £83,000 to £85,000 from April.
“The timetable for Making Tax Digital was always too ambitious and put too great a burden on the smallest firm. This delay is certainly welcome, but we would have liked to have more information about the implementation of MTD for larger limited companies”, said Simon Nuttall.
Amongst the Chancellor’s other announcements were an extra £2 billion for social care, and on International Women’s Day, funding of £5 million for individuals returning to work after a career break.