Announced earlier this month, the
new budget detailed many positive changes that will be effect businesses of
various sizes. The Autumn budget seems to favour small to medium-sized businesses
after the preceding budget was seen as an attack on these smaller firms due to
huge increases in business taxes, however, this revised budget aims to cater to
business owners who were previously left disappointed.
Chancellor Phillip Hammond
announced a reduction in business rates by declaring rates will now be charged
by the Consumer Prices Index rather than Retail Prices Index. This switch in
inflation measures was prematurely welcomed 2 years earlier than initially
planned and are expected to save around £2.3 billion
for businesses over the next 5 years. Furthermore, the ‘staircase tax’ has been
abolished which saw businesses in communal office blocks having to pay tax per
room and these bills were backdated to 2015, costing smaller businesses
thousands of pounds.
Moreover, the Chancellor has also
announced that revaluation
periods for businesses are to be shortened from every 7 years to 3 years.
This means business rates will be more realistic and aligned with current
rental values. Although smaller businesses will be celebrating, it will mean
more challenges for the Valuation Office Agency to keep up with issuing these
valuations and preparing data for the revaluation.
Despite Brexit causing reported uncertainty
with the economy, a survey showed around one-third
of small and medium enterprises were in the growth stage. This is a good
indication that the UK’s small business market will thrive outside of the
European Union. Additionally, with the savings from the reduction in taxes and
abolishment of ‘staircase tax’ there is more room for investment in research
and development to expand a business.
To further this positive growth, the
budget also announced an Enterprise Investment Scheme to help bolster this
growth within the small-medium business market. This entails a 30%
income tax relief to encourage investment for more high-risk ventures like
small-medium businesses trying to make their mark. This is most likely in a bid
to bolster the UK business economy to ensure we continue to grow beyond Brexit.
Also announced in the new budget were
changes to the living and minimum wage. The new national living wage is set to increase
from £7.50 per hour to £7.83 for those aged 25 years and older. Additionally,
the minimum wage has also increased for all other age brackets and apprentices
alike. This is a fantastic news for workers, however, it does mean that
businesses will need to ensure their financial forecasts reflect the recent
changes for April 2018 and they have effective revenue
planning in place to ensure they are preforming at optimal measures to
ensure they can accommodate all these new changes.
With all these changes taking
place next April, it is important that businesses are prepared financially.
Although there will be substantial savings encouraging investment back into
businesses, there may well be plenty of paperwork to prepare before April 2018.
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