Yesterday, Chancellor Philip Hammond appeared on the steps of 11 Downing Street with his iconic red briefcase to announce the Autumn Budget.
Once inside the Houses of Parliament, his speech laid out the financial changes we can all expect over the coming years (alongside some slightly cringey toilet humour). So what’s what? We’ve picked out the most important parts for business owners and how they might affect you.
The Tax Stuff
- First things first, the personal allowance on income tax has risen again. From April 2019, basic rate taxpayers will now pay 20% on income tax when they earn over £12,500, up from £11,850. The threshold is raised for higher rate taxpayers too, who will pay 40% on income over £50,000 – a rise from £46,350. The changes mean an extra £130 for basic rate taxpayers and £860 for higher rate. Bonus!
- For the self-employed, the biggest news was the impending roll-out of the IR35 rules across the private sector. The controversial law (we’ve covered it in detail here) is an attempt to stop employees masquerading as contractors, but the rules are decidedly grey and have resulted in a number of high-profile court cases. It currently only applies to the public sector, but come April 2020, large and medium sized businesses (those with over 250 employees) will be responsible for ensuring they are following the rules when hiring, or face fines.
The Business Stuff
- In a bid to help save our ailing high streets, business rates for small bricks-and-mortar retailers will be cut by a third, effective immediately. The change applies to businesses with a rateable value of £51,000 or less and is a welcome move for independent retailers across the country who are struggling in the wake of online retail giants.
- And in more good news for the high street, £675m has been set aside into a ‘Future High Streets Fund’,which will support local councils to draw up and implement improvement plans to keep our high streets thriving.
- The costs for small businesses taking on an apprentice are to be halved. At present, a 10% fee is payable by some small firms to cover training costs, but this will fall to 5% at an as-yet-unknown point in 2019.
The Other Stuff
- Details of the long-hinted-at ‘Amazon tax’ are finally revealed. The new Digital Services Tax will tax UK revenues of ‘tech giants’ (those who globally make over £500m per year) at 2%. At present they are taxed only on profits, much of which is diverted elsewhere. Shares in Amazon, Netflix and Facebook fell immediately after the announcement.
- PFI (Private Finance Initiative) and PF2 contracts have got the boot. The contracts allowed private companies to provide public services and infrastructure, and came heavily under fire earlier this year following the monumental collapse of Carillion. Existing contracts will be honoured, but no new ones will be signed.
The Brexit Stuff
- The usual Brexit confusion abounds. At the weekend, Hammond warned that a no-deal Brexit would involve having to draw up a new emergency budget – potentially rendering yesterday’s announcements null and void.‘Frankly, we’d need to have a new budget,’ he said to Sky News.Today, however, Sky News was told that all announcements would be pushing ahead, regardless of how Brexit plays out.
‘The budget I announced yesterday stands on its own two feet,’ he said. ‘…the measures I announced yesterday will go ahead in any case.’ Make up your mind, Phil.
- Still, whatever happens, at least we’ll have a new 50p.
As always, some winners, and some losers. If you want to discuss what these changes mean for your business, give us a call today.