The chancellor’s opening statement about productivity still being too low, families feeling squeezed, the need to make Britain ready for its ‘global future’ outside the EU and having an economy that ‘works for everyone’ was all pretty standard stuff which no-one would really disagree with or be surprised by. That tone ran through a Budget that was clearly designed to reassure the markets as we approach the triggering of Article 50.
The announced changes in the tax regime were all expected including the upcoming changes in Corporation Tax. His comments on Business Rates gave clarity but it wasn’t a surprise that they won’t be abolished. However, his unveiling of three measures to help those affected (no business losing small business rate relief will see its bill increase next year by more than £50 a month; 90% of local pubs will have a £1,000 discount on their business rates bill; and a £300m fund for local councils to offer discretionary relief for hard-hit cases will be launched) is good news.
There was also an emphasis on tax avoidance with various steps being introduced including tackling the abuse of foreign pension schemes; the introduction of VAT on roaming telecoms services; and the implementation of new financial penalties for professionals who enable a tax avoidance arrangement that is later defeated by HMRC.
In a bid to lessen the attractiveness of incorporation for self employed people, he also confirmed that he will reduce the tax-free dividend allowance for all shareholders from £5,000 to £2,000 with effect from April 2018. This will affect all investors, not just those who own their own companies. I expect that this is not the last we will see of such measures, with a report considering the wider implications of different working practices due in the summer. There is also consultation launched today on the tax treatment of various employee benefits and expenses.
A very welcome piece of news for smaller self employed businesses is the deferral of the Making Tax Digital requirement for online submission of quarterly accounting information by a year from 2018 to 2019 for those businesses with a turnover below the VAT threshold. Larger sole traders and partnerships will still need to get to grips with the new system in April 2018 and will need to start planning now, but the smallest businesses and landlords now have a year’s grace.
There was good news for the science and innovation sectors with some of the £23bn of investment he announced in the Autumn being allocated. This included £300m for research talent; £16m for a 5G mobile technology hub; and £200m for fibre broadband. We don’t know how the North West will directly benefit but it’s got to be welcomed. The £90m of extra transport infrastructure funding for the North also sounds like good news.
We work with many manufacturing businesses who I know will welcome the introduction of T-Levels as there is a consensus that young people often lack the skills that are needed in the workplace. Those manufacturing businesses will also be heartened to hear of the reduction of the administrative burden surrounding R&D tax credits announced today.
In summary, this Budget was a bit of a non-event. There were no real surprises or shocks, which was to be expected, as the government will not want to rock the Brexit boat. However, we might see some significant change in the way that employed and self employed people are taxed over the next few years, stemming from some of the consultations and reports launched today.