On Wednesday 22nd November Chancellor Philip Hammond announced this year’s Autumn Budget.
A number of announcements were made in relation to the UK economy. Most notably, he announced that Business Rates will switch to being increased by the Consumer Price Index (CPI) 2 years earlier than planned. This means that Business rates revaluations will now take place every 3 years, rather than the current 5, starting after the next revaluation currently due in 2022.
The Treasury predicts that the UK economy is forecast to grow by 1.5% in 2017, despite growth dropping from 2.0%. Hammond suggests that the economy will grow at a slower rate for the next three years, before picking up in 2021 and 2022.
An additional £3bn has been set aside to cover the costs of Britain’s exit from the European Union. This sum will be added to the £700m already set aside to prepare the UK for ‘any possible outcome.’
While good news for many low paid workers, rises in the National Living Wage and the National Minimum Wage will place extra pressure on businesses. The National Living Wage for those over 25 will increase from £7.50 per hour to £7.83 per hour from April 2018. The National Minimum Wage will rise to a maximum level of £7.38 per hour for 21-24 year olds.
Recognising the difficulty that employers face in recruiting people with the right skills, the Government has also announced to invest £64 million for construction and digital training courses. £34 million will go towards teaching construction skills like bricklaying and plastering and £30 million will go towards up-skilling the country’s workforce through digital courses.
Businesses that use diesel vehicles should be aware that Company Car Tax and Vehicle Excise Duty on new diesel cars will rise temporarily to support local authorities in tackling air pollution as part of the Clean Air Fund.
Giving his initial reaction to the Autumn Budget, Dr Adam Marshall, Director General of the British Chambers of Commerce (BCC), said: “Chamber business communities wanted the Chancellor to focus on the basics – rates, roads, and ringtones – and will be pleased that they will see some action on all three fronts.
“While more remains to be done to reduce the impact of business rates on investment and growth, the Chancellor’s decisions will lessen the impact of rate rises on hard-pressed firms in many parts of the country from next April. Chambers campaigned hard for a reduction in the relentless rises of this iniquitous tax, and will be pleased that the Chancellor has listened and reduced the burden.
“Despite the inclusion of a number of announcements that will support business communities in the short term, more will still need to be done over the coming months to lay the groundwork for a successful Brexit transition. Businesses will expect greater boldness from the Chancellor – and more radical support for infrastructure and investment – once a Brexit transition period is secured and the shape of a UK-EU deal becomes clearer.”
In a bid to ease pressure of small and businesses, it was announced int he budget that VAT threshold will remain at £85,000.
Alison Birch, Director of VAT at Chamber Member, Mitchell Charlesworth, said: “Following the recent report from the Office of Tax Simplification there has been concerns that the VAT registration threshold was going to be dropped in the Budget (potentially to £20,000 which is the average threshold in the EU).
“As a result the plan to keep the VAT registration threshold at £85,000 will be very welcome to small businesses although the 2 year freeze will inevitably capture a number of businesses who have been hovering under the VAT registration threshold.”
On a social level, the budget covered a variety of areas that have been criticised recently. Changes will be made to the Universal Credit system and the Chancellor has announced the abolition of stamp duty fees for 80% of first time buyers.
