Spring Budget 2017 – the policies that matter for businesses
As predicted we had a very restrained Spring Budget from Chancellor Philip Hammond this morning, with very few freebies being thrown around and little to get excited about – the Office for Budgetary Responsibility’s post-Budget briefing had a few more interesting tidbits though it wasn’t exactly fighting against tough competition.
One interesting chart that came out was showing that the UK tax burden has now reached a 50-year high – something that businesses will be acutely aware of and would have liked to have seen that burden lessened by the Chancellor today. But alas, Philip was not handing out any gifts today. The absence of giveaways pours cold water on speculation that Theresa May could call a snap election to bolster her majority ahead of a European Union exit.
In his preamble to any policy announcements, Hammond announced that among the major economies the UK’s growth was second only to Germany and that the OBR had upgraded its growth forecast for next year from 1.4 percent to 2 percent. In addition, the employment rate has risen with unemployment falling fastest in Yorkshire and Wales.
Getting into the policy announcements, Hammond tried to address concerns over the prospect of sharp business rate hikes when revaluations hit on 1st April.
The Chancellor announced three measures
- Any business that will be taken above the small business rate relief threshold after revaluation will benefit from an extra cap – meaning rate increases will be limited to £50 a month.
- In addition, there will be special provision for pubs with a £1,000 discount for all pubs with a rateable value of less than £100,000 which applies to 90 percent of pubs in the UK
- Councils will be given a £300m fund allowing them to provide discretionary rate relief.
The policy announcement that got the most attention from self-employed journalists (besides the 43p increase in duty on a 1-litre bottle of gin) was the announcement that the National Insurance Contribution self-employed rate (Class 4) would be increased by 1 percent in April 2018 and another 1 percent in 2019. The Chancellor framed the increases as closing the total tax gap between employed and self-employed workers given that self-employed workers now enjoy the same state pension rights. In addition, the Chancellor cut the tax free dividend allowance from £5,000 to £2,000.
The only remaining announcement to get the attention of SMEs was the provision of £200m for projects to get private sector investment in full-fibre broadband networks.