2017 Budget: Self Employed and Small Business Guide

by QuickBooks UK

4 min read

Top Budget 2017 take-aways

  • Stamp duty axed for properties under £300,000
  • VAT threshold stays at £85,000
  • £0.5 billion investment in UK tech upgrade

Today’s budget saw Philip Hammond, the Chancellor of the Exchequer, with a slight spring in his step. Exchanging jokes with Prime Minister Teresa May about cough sweets and cabinet colleague Michael Gove, Hammond was surprisingly breezy. Perhaps he could afford to be, as this was a budget that was ‘strong and safe’ rather than a radical shot into the unknown – especially when it comes to small businesses.

Changes to stamp duty

The headline announcement is undoubtedly around the scrapping of stamp duty on home buys costing £300,000 or less – or, the first £300,000 for properties worth half a million pounds or less.  This change was certainly geared towards younger voters, many of whom are looking to get their feet on the housing ladder like their parents and grandparents did. And it wasn’t the only thing aimed at younger voters either. Hammond also announced a commitment to build new houses and a plan to introduce 3 new garden cities.

 

What about small businesses? While there was nothing as seismic in the budget, there’s also not a great deal to be negative about either.

No change to VAT threshold 

Pre-budget, the biggest concern had been around whether the VAT threshold would be lowered. While this would have brought the UK in line with many other European countries, it would have led to a nasty shock for many small businesses and freelancers across this country – not to mention a big increase in admin (although of course, the use of accountancy software could vastly reduce this burden). However, Hammond opted to keep the threshold as it is for the next two years. There’ll be a consultation on the matter, though, so it’s unlikely to be the last we hear of it.

Business rates & inflation

The other main headline was around business rates. These will now increase in line with Consumer Price Inflation (CPI) rather than the Retail Price Index, which is generally higher. This is good news for business who should now find the rate of increase will slow down.

On this, Dominic Allon, Vice President and Managing Director Intuit Europe had this to say;

“Small businesses across the country will be breathing a sigh of relief following today’s Budget announcement. Despite much fanfare over the lowering of the VAT threshold, the Chancellor stood firm with the nation’s small businesses.

“Following his u-turn over the self-employed national insurance hike last summer, it’s not wholly surprising. The government is sitting up and taking note of Britain’s self-employed and small business owners. As the Chancellor said, we need ‘a dynamic and innovative economy’ and we rely on the UK’s start-ups and entrepreneurs to drive this and prop up our economy in a time of continued turmoil.

“While the government has pledged not to lower the threshold for another two years, he will look at reforming it. The Chancellor talked about a fairer vision for Britain, let’s hope he keeps this in mind when looking at the VAT reforms.

“But this isn’t the only support for small business, reducing business rates by £2.3bn by pegging to the CPI measure of inflation, not RPI, and assessing business rates every three years, which will help give small businesses more stability and a firmer understanding of their current finances.”

Dominic added…

“According to The Chancellor, a new technology business is founded in the UK every single hour. Impressive figures, but we can improve on this. Through continued research and development and technology investment throughout the UK, we can double this, breathing life into new businesses up and down the country.

We see and work with new start-ups on a daily basis. We understand the struggles they have around funding, innovation and staying relevant against larger established competitors with seemingly endless amounts of money to throw into R&D. Through providing new funds, we can help small, nimble start-ups to grow. The recognition of fintech as a key part of this growth will help us boost the UK’s position in this area and support the hundreds of fintech start-ups we speak to on a daily basis.”

New tech opportunities

There are also significant business opportunities on the horizon, with £0.5 billion announced in technological investment for the country. This includes driverless cars and electric-car charging points, alongside artificial intelligence and a 5G mobile network.Overall, while this was a budget that did not go out of its way to favour small businesses, it didn’t rock the boat too much either. With most companies seeking certainty, the path, at least in the short term, seems clear

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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