What the 2017 Spring Budget means for businesses
The government’s 2017 spring budget is behind us. As such, we thought we would provide a quick summary of what the budget means for businesses in the UK.
Self-employed business owners may not be overwhelming with positivity, as they are now facing an increase to their National Insurance contributions. Currently, the levy on self-employed profits sits at 9%. This rises to 10% in 2018 and 11% in 2019. Chancellor Phillip Hammond claimed this would raise an extra £2 billion in tax revenue during the current Parliamentary term.
For the self-employed who earn £16,250 or less, however, they will instead see a reduction in their expected National Insurance contributions. This is supposedly to ensure a fighting chance to self-employed people who are low earners or expected to be worse off.
The Chancellor elaborated on this raise by stating the lower rate at which the self-employed pay National Insurance contribution was unfair to the 85% of the UK work force that aren’t self-employed. Those who are self-employed through a personal service company will see their tax free dividend allowance cut from £5,000 to £2,000 from next year onwards. This is projected to raise £2.6 billion this Parliament.
For businesses hit hardest by the budget, the government has created a £450 million fund as a relief. £300 million of this will be distributed to local councils, and prepared for those who are expected to be worse off by their expected rise in contributions.
It’s not as pessimistic for all self-employed workers, however. The Chancellor announced in the budget that pubs with a rateable value of £100,000 or less will get a one year £1,000 discount on their rates. That’s around 90% of pubs in the UK.
Perhaps unexpectedly, the budget also pledged a £270 million fund for research into “disruptive technologies,” which includes biotech, driverless cars and other robotic and/or automated systems.
Finally, the Chancellor unveiled plans to clamp down on tax avoidance by the country’s richest employers. This includes tackling abuse of foreign pension schemes, introducing a VAT on roaming telecoms services and a tougher crackdown on professionals who solicit tax avoidance arragements. All these measures combined are projected to bring in an extra £820 million.