What are the main changes to be impleneted as a result of the autumn budget which will directly aid or hinder UK’s small to medium size businesses?
- Tax threshhold increase – The Budget delivers the government’s commitment to increase the Personal Allowance from £11,850 to £12,500 which means an extra £650 a year into the pockets of everyone earning £12,500 and above. There is also an increase to the higher rate threshold from £46,350 to £50,000 in April 2019 affording an extra £3,650 per person earning £50,000 or above this year. The government’s objective is for a fair and sustainable tax system. This is a year earlier than planned and will result in cutting taxes for 32 million people.
- National Living wage – The government wants to see higher wages for those in work. To drive wage growth for those on the lowest pay, the National Living Wage will increase from £7.83 to £8.21 in April 2019. Universal Credit Work Allowances will be increased by £1,000.
- Support for the high street – The Budget has unveiled a series of measures to support high streets. Business rates are to be cut by a third for up to 90% of all retail properties, as well as a Future High Streets Fund of £675m to support investment in improvements of high streets.
- Fuel duty – Fuel duty and duty rates for beer, cider and spirits will be frozen.
- Structures and Buildings Allowance – The government want to incentivise business investment with a new ‘structures and buildings allowance’ (SBA). The aim of the SBA is to relieve the costs of physically constructing new structures and buildings. This will encourage investment in the construction of new structures and buildings that are intended for commercial use. Relief will be given at a flat rate of 2% for a fifty-year period.
- Research and Development – In a move designed to create an economy driven by research and innovation, £1.6bn was earmarked for R&D funding. This has been pledged for new investments to support the government’s industrial strategy, ranging from nuclear fusion to quantum computing.
- Annual Investment Allowance – A two-year temporary increase to the Annual Investment Allowance (AIA) from January 2019 is to be implemented. By accelerating the relief on qualifying expenditure up to a £1,000,000 limit, this measure will provide an incentive for those businesses already spending up to the £200,000 threshold to increase or bring forward their capital expenditure on plant and machinery.
- Digital Service Tax – The Budget introduces a new ‘digital services tax’ on large businesses who generate £500m in revenues per year. This is to be targeted at technology giants who will be taxed 2% on the money made from UK users. This is to ensure that larger companies shoulder the burden rather than start-up businesses.
- Plastic Tax –As part of its wider strategy on tackling single-use plastic waste, the government will introduce a world-leading new tax on plastic packaging. Subject to consultation, this will mean packaging that does not contain at least 30% recycled content will be taxed. This is not due to come into force until April 2022.
- Subcontractors IR35 – The government are reforming off-payroll (subcontracted) workers in the private sector, known as IR35, to help people comply with the existing rules. The responsibility of completing the IR35 will be transferred to the organisation the individual works for, rather than the individual completing this for themselves. The change will not be introduced until April 2020 to give organisations time to prepare for this. Small organisations will be exempt from completing this and guidance will be given from HMRC for medium and large companies.
For full details on the this budget see https://www.gov.uk/government/publications/budget-2018-documents/budget-2018