We’ve all heard about the release of Philip Hammond’s Spring Budget for this year, and many of us will have tuned in to listen to the news summary about it, but how many of us understood what the contents of the budget actually mean for small business owners and the self-employed?
We’ve broken the budget down and highlighted the areas that will affect you and your business the most.
The high business rates were highly criticised and so the government has taken the following steps in an attempt to take some of the pressure off from the rates of smaller businesses.
- A fund of £300 million will be offered as a discretionary relief to small businesses that are the worst affected by the rates.
- Any business that is losing their small business rate relief will see their bill increase by no more than £50 a month.
- All pubs with a rateable value of less than £100,000 will get a £1,000 discount on the rates they pay.
From April 2018 the total tax paid by an employed worker and by one that has set up their own company is set to change. The chancellor plans to do this by reducing the tax-free dividend allowance for directors/shareholders. It will be reduced from £5,000 to £2,000.
The chancellor has taken measures to benefit those in employment by scrapping the NIC Class 2 and raising the Class 4 national insurance contributions from 9% to 10% by April 2018. They are then due to rise to 11% in April 2019, which will raise £145 million a year by 2021-22. A self-employed person with profits over £16,250 will have to pay more as a result of these changes.
The UK economy is forecast to grow by 2% and at a faster and higher rate than was previously predicted. Although, this isn’t set to last, with Hammond outlining that growth will then fall to 1.8 in 2018 and 1.7 in 2019. Inflation is forecasted to be 2.4% and then 2% up to 2019.
We asked PFC Director, Alun Rogers, to shed some light on how this new budget will affect SME’s and freelancers –
“There’s no doubt that Philip Hammond has opted for some controversial changes in this 2017 budget, particularly in relation to national insurance contributions and business tax. There is also no doubt that it is already tough out there for SME’s and freelancers, and these rises in contributions certainly won’t help anything. That’s why we do everything we can to assist small businesses and the self-employed to source a range of suitable finance options when they struggle with unpaid invoices and cashflow issues amongst other financial issues relating to business.”
If you want to discuss what finance options we have available and how we may be able to help you and your business, then please do not hesitate to contact us here at PFC.