What does Budget 2018 mean for your small business?Published on 30th October 2018 2018-10-30T11:20:38+00:00
Chancellor Philip Hammond announced his 2018 budget at 3.30 pm on Monday. He held out the prospect of an end to austerity, with some spending boosts, cuts to income tax – and some very good news for SMEs.
“A brilliant Budget”.
Phil Fleming, spokesperson for the Federation of Small Businesses.
What was there in the budget to get so excited about? There were actually several measures, which, although relatively small in themselves added up to a lifeline for many struggling small businesses.
Business rates relief
Business rates have become a major problem for many small businesses, and especially those in the retail sector. The rapid rise of Amazon amongst others has meant that shoppers are turning to online shopping, buying everything from groceries to clothing – and Christmas gifts – without moving from their sofas.
For many small retailers – as well as large ones, such as BHS and Toys R Us - it has meant customers are becoming harder to find and revenues are falling. Boarded-up shops have become all too frequent a sight in many parts of the country.
Mr. Hammond ordered £900m of business rates relief for small retailers as part of an effort to combat shuttered shops on the high street.
This could mean saving around a third of the sums currently demanded by the local council, saving around 90% of small firms in England an average of £8,000 a year.
It is hoped that the relief will be extended to hospitality and service businesses, not just retailers, when the details are finalised.
Pubs, cafes and takeaways and retailers of all kinds will therefore benefit. In some cases, it will spell the difference between businesses staying open until next year, and shutting up shop for good.
The move will cut business rates bills for almost half a million small high street shops in a £1.5bn spending pledge. It could be time to look at making the money saved work harder for your shop, with new stock, lighting or displays
But the Chancellor has not stopped there.
Supporting the High Street
The Chancellor will hope the move on rates gives some short-term relief for struggling retailers, but it has to be admitted that the problems of the high street actually go much deeper. The budget, therefore, included a £650m transformation fund which will help local authorities transform their high streets for the long term, with initiatives including supporting infrastructure and transport access.
The initiative recognises that the high street will need to shrink a little. The fund will help councils to convert empty shops into residential dwellings. This will be supported by a review into relaxing town planning rules to ease the conversion of under-used retail units.
This is a controversial move. Some retail associations believe that it will mean a loss of retail property for the future – but conversely, it will help a lot of small building companies find work, as well as creating much-needed new homes.
What about the National Living Wage?
It has to be admitted that the Chancellor’s measures were not all positive for small businesses. They included a small increase in the National Living Wage, which will increase by 4.9%, from £7.83 to £8.21 an hour, from April 2019. This will mean an extra £690 a year for a full-time worker, and corresponding extra costs for employers. However, the National Living Wage is not the minimum wage, leaving room for negotiation with staff.
Fuels and alcohol duty unchanged
Fuel duty remains unchanged. Freezing of fuel duties for a ninth year could be worth a saving of around £1,000 a year for drivers, while businesses running a fleet could expect to save considerably more.
Frozen duties on beer, cider and spirits over the next year will also help bars, pubs and restaurants, many of which have been facing problems as cash-strapped customers tighten their belts.
A cut in the Apprenticeship Levy
The apprenticeship levy has been controversial for those businesses affected, and the Chancellor has made concessions that will ease the costs. The 10% fee that small businesses must pay when they take on apprentices will be halved, he has announced.
SMEs must now only contribute 5% to the training, as part of a £695 million package to support apprenticeship schemes, with the change coming into effect from April 2019.
This will mean that it will cost less for a small business to take on apprentices, helping boost employment, addressing the skills shortages – and cutting costs.
What about technology?
The fact that the large tech companies such as Facebook, Amazon and Google are able to avoid UK tax, despite taking a great deal of revenue in the UK has been a source of resentment as well as lost revenue. The Chancellor has moved to raise more tax from tech companies with a turnover of more than £500m.
With a booming tech industry, the move is seen by many as a way of providing a level playing field, and actually providing a boost for smaller, home-grown tech firms who can still expect to come in under the tax threshold.
What should You do?
Many commentators agree that the Budget provides some important financial boosts for small business – but it will still be necessary to invest to take advantage of the opportunities that they present.
At Rangewell, we are experts in business funding of all kinds, and we understand the challenges, as well as the opportunities.
We can help you find the funding you need to make the most of your business, whether it is with a straightforward business loan, finance for growth or to support cashflow, or with ways to cut the costs of the equipment and vehicles you need. We can often find finance that undercuts that offered by suppliers.
If you want to make a major investment, buy your premises, for example, or even buy an existing business, we have solutions for that, too.
If the Budget has helped you see some new opportunities for your business, and you would like to discuss ways that you could make the most of them, contact us now.
Call us now on 020 3695 9476
The chances are we can help tailor a funding solution for your business plans – and make the most of your own business budget.
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