Last week Philip Hammond announced the 2017 budget and in and amongst the jeering and cheering he outlined his plans for the next financial year, a somewhat underwhelming outlook for business. However, a week after the announcement Theresa May has done a u-turn on one of the key points, a rise in Class 4 NIC targeting the self employed with higher tax rates.
Mr Hammond initially justified the raise explaining that self employment falls outside of the government’s election pledge of a ‘tax lock’, with the group finding themselves targeted as a way to raise revenue. This week, Theresa May contradicted this, stating that the rise in Class 4 NIC goes against the government manifesto and would not be progressed. The move is great news for the country’s self employed.
Phil Smith, Managing Director at Business West commented,
“The self employed have been the bedrock of employment growth in the UK since the great recession, and tax changes would have made many nervous.”
Ian Mean, Director of Business West Gloucestershire commented,
"I wrote at the time for Business West that, rather than pausing the tax hike, Philip Hammond should reverse it. We can take no personal credit for this screeching u-turn by the Chancellor but we can say that we stood up for self-employed business people. We will continue to do just that."
Other key points for start-ups and small businesses were;
- The OBR has upgraded the forecast for growth this year from 1.4% to 2%
- Growth forecast for 2018 revised down from 1.7% to 1.6%
- From April 2017 Corporation tax will fall to 19%, which is the lowest rate in the G20. In 2020 it will fall again to 17%
- There will be a reduction in the administrative burdens around R&D tax credit relief
- For businesses below the VAT threshold, quarterly reporting for small businesses will be delayed until 2018
- Any business coming out of small business rate relief will benefit from a cap – no business coming out from rate relief will see their rates increase by more than £50 a month for the first year
- A £1,000 discount on business rate bills for 90% of England’s pubs
- Local authorities to benefit from a £300m fund to help address business rates hardship
- All measures above will see a £435m cut in business rates in total
- From April 2018, the tax-free dividend allowance will be reduced from £5,000 to £2,000
- The National Living Wage will rise to £7.50 in April
- Personal allowance rate will rise for the seventh year to £11,500, and the higher rate threshold to £45,000
- £6bn a year to be committed to childcare – tax-free childcare to rise to 30 hours a week
- £300m allocated to support the brightest research talent in STEM and technology
- New T-levels to be introduced, providing qualifications for technical education
- 3m new apprenticeships to be supported by 2020
Discover more on the Virgin Start-up website.
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