From the top · 29 October 2018

Budget 2018: 7 new pledges micro businesses need to be aware of

Did Hammond protect the interests of entrepreneurs?
At the start of the 2018 Budget, chancellor Philip Hammond promised that the end of austerity was in sight, with further pledges to invest in Britain’s entrepreneurs in order to drive the economy forward.

We’ve rounded up every policy announcement and financial pledge from Hammond’s 2018 Budget that small and micro business owners need to be aware of.

Digital Services Tax

Following calls to level the tax playing field between small retailers and online companies, Hammond announced a new tax for digital firms with over 500m turnover.

Yomdel CEO, Andy Soloman, welcomed the arrival of the digital services tax.

“This budget levels the playing field between the tech giants and the little guy, and I for one raise a glass to Mr Hammond for listening to the UK’s small businesses and delivering this big boost when they needed it most.

“It will no doubt come as a kick below the belt for Bezos and Zuckerberg who have had it too good for too long at the expense of the smaller British retailer, who have been relying on seasonal boosts in sales just to keep their heads above water.”

“Technology plays such a huge part in our day-to-day lives, but it’s important that as it becomes more prevalent we don’t allow it to do so at the expense of British business.”

Business rates reform

Hammond announced a 1.5bn cash boost into the UK business rates system, with small high street retailers the focus of relief to combat the threats posed by ecommerce and shifting shopping habits.

The Treasury claimed almost half a million high street businesses would see business rates cut by a third, through 900m of immediate business rates relief.

Rateable values are also set to change. For the next two years, all businesses on the high streets with a 51, 000 rateable value or less will see business rates bills cut by a third. According to the Treasury, changes would see a Sheffield pub with a rateable value of 37, 750 save 6, 178 next year, while a Midlands newsagent with a rateable value of 14, 250 would save 1, 749.

Expressing relief at the pledge, Mike Cherry, chairman of the Federation of Small Businesses (FSB), said: For far too long (retailers) have come up against an outdated and unfair rates system and it’s clear that change is needed.

IR35

Following a drawn-out consultation period, the chancellor confirmed IR35 the so-called “tax grab” on freelancers would be introduced to the private sector. However, Hammond hinted that the rollout would “exempt small business”. How small is small?

Dave Chaplin, CEO and founder of contracting authority ContractorCalculator, has been a long time critic of IR35. He said:?”The chancellor appears to have believed the misleading rhetoric emanating from the Treasury and HMRC on this matter and it is still incredibly worrying that, in the face of strong opposition to the Off-Payroll rules, and with the consultation process yet to be concluded, the chancellor has made this announcement.

“While the fiscal impact of the reform for the taxman is still unknown, one certainty is that a private sector rollout will prove incredibly costly for UK firms and for a government that claims to be pro-business, this extra tax will slap an additional 10% onto the cost of hiring flexible workers for growing businesses that are unable to afford full-time workers. “

VAT

Hammond pledged to maintain the existing VAT threshold until at least 2020.

High street investment

As part of the 1.5bn investment into UK high streets, local high streets will benefit from 675m cash to improve transport links, re-develop unused shops as homes and offices and re-use historic properties.

New Enterprise Allowance and tax-free training

Despite fearsthat the New Enterprise Allowance (NEA) would be axed altogether, the chancellor pledged to extend the scheme for would-be entrepreneurs currently on state benefits.

He also announced tax-deductable training opportunities for the self-employed.

Tax-free personal allowance


 
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ABOUT THE EXPERT

Praseeda Nair is the editorial director of Business Advice, and its sister publication for growing businesses, Real Business. She's an impassioned advocate for women in leadership, and likes to profile business owners, advisors and experts in the field of entrepreneurship and management.

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