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Spring Budget 2017 – how will it affect businesses?

At a glance

  • Philip Hammond has delivered his first Budget since becoming Chancellor
  • Tax increases for the self-employed and measures to soften the impact of increases in business rates are among the headline announcements
  • We discuss what the Spring Budget 2017 could mean for businesses

Philip Hammond took centre stage to deliver what will be the last ever Spring Budget.

Mr Hammond opened his speech by promising the Budget would provide “a strong platform for Brexit” ahead of the move to trigger Article 50.

Here, we explore the key Budget announcements affecting businesses.

Business rates reform

The Chancellor announced a consultation on business rates, along with three specific measures to help small businesses facing the biggest increases following the rates revaluation:

  • No business facing the loss of small business relief will see increases of more than £50 a month, and any subsequent increases will be capped
  • Around 90% of pubs in England (those with a rateable value of less than £100,000) will be given a £1,000 discount on business rates
  • Local authorities will be given £300m for a discretionary hardship fund to support the worst affected businesses.

The government has also promised measures to make sure that online retailers don’t benefit at the expense of traditional bricks and mortar stores, although Mr Hammond said changes on this front would have to wait for the “medium term”.

Tax and National Insurance

The Chancellor revealed that National Insurance contributions from the self-employed will rise next year, prompting IPSE, an organisation which represents independent professionals, to claim that self-employed workers were the “biggest losers” in the Budget.

The self-employed will see the main rate of National Insurance contributions increase from 9% to 10% in April 2018 and then again to 11% in April 2019.

It has been calculated the changes to personal taxation could see millions of self-employed workers paying an average of £240 extra a year, however there were no changes to National Insurance paid by the employed and employers, or to income tax or VAT.

The government has also reiterated its pledge for the UK to have the lowest corporation tax rate in the G20, falling to 19% from April. Mr Hammond said he was “listening to the voice of business”, with rates falling again to 17% from 2020.

However, there were no announcements in relation to Insurance Premium Tax (IPT), despite significant lobbying from business groups who had urged Mr Hammond to cancel plans for a 2% rise in the tax.

Infrastructure, research and development

Mr Hammond reaffirmed the £23bn of infrastructure investment that was announced in the Autumn Statement and accepted industry calls for a reduction in administrative burdens relating to the tax credit regime.

Other announcements include:

  • £270m of funding for robotics, biotech and driverless cars
  • £200m for fibre broadband
  • £16m to develop a 5G mobile technology hub

Transport

There were a number of transport announcements that are likely to be well-received by businesses, including:

  • Plans for a £690m competition for English local authorities to tackle urban congestion
  • A £23m commitment for Midlands road networks
  • £90m of roads funding for the North of England
  • A freezing of the vehicle excise duty and the HGV Road User Levy

Savings and pensions

Mr Hammond also announced a new bond that will pay 2.2% on deposits up to £3,000. On the pensions front, there will be a reduction from £5,000 to £2,000 in the tax-free dividend allowance for shareholders from April 2018.

For more information, please speak with your local Zurich contact.

Image © Getty

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