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Spring Budget 2017: Bad news for small businesses and the self-employed?
Chancellor Philip Hammond has revealed his first Budget as Chancellor and the last before he moves the Budget to the Autumn. Measures affecting businesses and the self-employed were prominent in the Spring Budget 2017 and @UKplc Company Registrations is taking a look at how these might affect you.
National Insurance Contributions
National Insurance contributions for the self-employed are changing. The main rate of Class 4 National Insurance will increase from 9% to 10% in April 2018, and to 11% in April 2019. These increases apply to earnings between £8,060 and £43,000. Those earning below £8,060 will pay nothing, whilst those above £43,000 will continue to be taxed at 2%.
Ministers claim those earning £16,250 or less will pay less as a result of these changes, but it is thought that millions of self-employed workers could end up paying an average of £240 a year more than they do currently.
The Federation of Small Businesses (FSB) has described these new measures as a “tax grab” and says that the self-employed “need help and support from Government given the spiralling costs of doing business, not additional tax burdens.”
Funding for Businesses Hit by Business Rates Increases
£435 million has been allocated to firms affected by increases in business rates, including a £300 million hardship fund for the worst hit. Meanwhile, rate rises for businesses losing their existing relief will be capped at £50 a month.
However, the Confederation of British Industry believes that this is just “limited relief” for businesses affected by business rates and it “falls short” of what they really need.
More Time to Prepare for Tax Digitisation and Quarterly Reporting
Privately-owned SMEs (small to medium-sized enterprises) are to be given an extra year to prepare for tax digitisation and quarterly reporting. There will be a delay in the implementation of mandatory quarterly tax reporting for businesses with a turnover of up to £83,000.
This is good news for the smallest of businesses, which will now have more time to prepare for the increased costs and administrative burden that could come with the Government’s move towards more frequent reporting and a digitised tax system.
While some of the announcements in this week’s business may be discouraging for the self-employed and small businesses, setting up a new business can still be a worthwhile adventure.
In 2016’s Autumn Statement, the Chancellor committed to reducing corporation tax from 20% to 17% by 2020 and he pledged to invest £400 million into innovative growing firms. In addition to this, the Hammond has now committed £16 million for 5G mobile technology and £200 million for local broadband network – schemes which will greatly benefit UK businesses.
Here at @UKplc Company Registrations, we want the companies we form to grow. That’s why we offer a range of extra products and services alongside our company formation packages – so you can focus on the important things, like your business.