What does the autumn budget 2017 mean for businesses?
Chancellor of the Exchequer, Philip Hammond, announced the Autumn Budget 2017 last week, outlining his plans for the UK’s finances in the coming months and years.
He announced that this Budget is to “look forward, embrace change, meet our challenges head on and seize the opportunities for Britain”.
Whilst headlines largely fixated on the stamp-duty giveaway for first-time buyers, there was a range of pertinent announcements for businesses on issues such as VAT, business rates, and investment.
Overall economic outlook
High borrowing, falling growth, the uncertainty of Brexit and a slim Government majority meant that the Chancellor did not have much money to play with nor support any radical changes he might have hoped to make.
Prospects for growth and productivity were significantly downgraded. The Office for Budget Responsibility cut its growth forecast for this year to 1.5% from 2.0% then averaging 1.4% over the next five years.
Lower growth forecasts mean the Government will need to borrow more or raise taxes to plug the shortfall. This budgetary challenge is made even harder given the additional £3bn which has been set aside to cater for potential Brexit outcomes.
There was good news the business community as the Chancellor opted to reduce steep rises in business rates.
Small businesses paying business rates on premises will see rises in line with the Consumer Prices Index as opposed to the Retail Prices Index, which tends to be higher. This could result in a rates reduction of around 1%.
Business affected by the so-called “staircase tax” – which meant businesses using office spaces separated by communal stairs, lifts or hallways were charged higher rates – will be able to apply to have that rate assessment lowered.
Philip Hammond said the law would change and extra money paid by businesses since the ruling would be refunded.
The Chancellor also announced that rateable values would be recalculated every three years instead of every five. That should prevent the steep increases experienced in 2017, when the first revaluation in seven years took effect.
However, rates will still rise by about 3 per cent from April in line with the CPI — and many small business leaders had wanted them to be frozen.
The main research and development (R&D) tax credit rate will be increased to 12% while £2.3 billion Government funds have been set aside for investment in R&D.
The Chancellor confirmed the introduction of a national retraining scheme focusing on digital skills and construction.
The VAT registration threshold will be frozen at its current level of £85,000 for two years from April 2018.