WHAT THE BUDGET MEANS FOR BUSINESS
The most famous red briefcase in the world sprung open this month and its contents have been scrutinised up and down the country.
From mild to wild, terrific to terrible and bland to brilliant, opinion is as divided as ever. But what’s the real deal for businesses? What’s going up? What’s going down? And what does it all mean?
To aid in budget digestion, here’s a summary of the main points. Some good. Some bad. Some very much the same. Here are six things your business needs to know about Chancellor Phillip Hammond’s shiny-new spring budget.
1) THE UK’s ECONOMIC PERFORMANCE REMAINS STRONG
So you can all breathe a collective sigh of relief. Despite the uncertainty around Brexit. The UK’s economic growth is forecast to be resilient. The office for budget responsibility increased its economic growth expects for 2017 rising from 1.4% to 2%, ensuring that the UK is the second fastest growing economy in the G7, just behind Germany.
Britain is also experiencing record employment, with a further 650,000 people expected to be in employment by 2021. The national deficit is down, along with annual borrowing, which was £16.4bn lower than forecast. This leaves Britain is a good position to begin the looming Brexit negotiations.
2) GOVERNMENT WANT THE UK TO BE ‘THE BEST PLACE TO GROW A BUSINESS’
It will come as no surprise that the Chancellor wants the UK to be the best place to start and grow a business. The budget was presented as one that has listened to businesses and business groups, who have welcomed additional support for business tax rates relief. This sounds good to us. But it’s not all sunshine and lollipops. If this budget is to be remembered for anything, it will be the one major change that changes back after only six days.
3) THE SELF-EMPLOYED WERE FACING A TAX RISE, BUT NOW THEY'RE NOT.
The most controversial aspect of the spring 2017 budget was the announcement of plans to raise self-employed people’s national insurance contributions and to reduce the tax-free dividend from £5,000 to £2,000.
But just under a week after the announcement, the Chancellor was forced into an extraordinary U-turn, after coming under pressure from Tory backbenchers and business groups to drop the hike in contributions, stating that the tax rise broke a 2015 manifesto pledge. The turn -around made sole traders happy, but left a '£2bn black hole' in the budget, which has yet to be plugged, but the shortfall is expected to be addressed in the Autumn budget.
4) BUT THERE’S WELCOME RELIEF IN THE FORM OF A BUSINESS RATES FUND
Significant rises in tax can make the difference between a business staying afloat and going under. In addition to the £3.6bn transitional relief announced in the Autumn Statement, the government also announced a £435m fund to support struggling businesses.
This will provide English local authorities with £300m discretionary help for individual cases and offer support for small businesses losing Small Business Relief. Any business exiting small business rate relief will receive an extra cap, meaning their rate will not increase by more than £50 per month.
5) CORPORATIONS HAVE BEEN AWARDED A TAX CUT
The government want to make Britain an attractive prospect to corporations. They bring wealth, jobs and further investment. One way for our nation to look more appealing is to lower corporation tax and that’s what’s happening. Corporation tax will fall to 19% in April and to 17% in 2020, helping to make the UK one of the best places to grow a business.
6) MORE DETAILS ARE NOW AVAILABLE ON THE NATIONAL PRODUCTIVITY INVESTMENT FUND (NPIF)
As every business knows, it’s important to continually invest in order to maximise productivity and the government’s NPIF should do just that.
Established in the Autumn Statement, the NPIF will provide £23bn of high-value investment between 2017-18 and 2021-22, with a focus on priority areas that are critical for improving productivity: economic infrastructure, housing, and R&D.
Measures include; Investing £470m in digital infrastructure to support the next generation of broadband, ensuring the UK is a world leader in 5G mobile technology, investing £200m in a full-fibre broadband network, £400m Digital Infrastructure Fund to be launched in spring 2017, £93n for pinch points on national road network in the North and £250m for a Talent Fund, including 1,000 additional PhD places aligned with the government’s Industrial Strategy.
Ok, so thinking about the UK budget can be tough, but It’s all about allocating funds in the right (and hopefully fair) way to benefit the people of Britain and to help the country to prosper. You have your income and you have your expenditure. A budget, by it's very nature, will always benefit some while disadvantaging others.
But one of the biggest criticisms of the spring statement is that it was pretty unremarkable and provided no further on the UK’s long-term economic future, doing little to address the ‘elephant in the room’ that is Brexit.
This budget could best be described as cautious and in times of uncertainty, this may be a sensible choice. Mr Hammond’s briefcase will return in the Autumn. Hopefully providing more insight into Britain’s future direction and business growth hopes once Brexit kicks in.
For more information on the spring 2017 budget visit parliament.uk
For more information on the 2018 International Business Festival visit internationalbusinessfestival.com