Since 16 March 2016, when George Osborne announced his eighth budget as Chancellor, the world has been shaken. Brexit. Then Trump. The media, analysts, pollsters and many business owners have been surprised by recent events.
Small business owners are known for their resilience. We adapt, adjust and thrive. Chancellor Philip Hammond announced his Autumn Statement, so we have reviewed the key highlights that you need to know, for your personal and business finances
FIRSTLY, IS THE ECONOMY STILL GROWING?
Yes, but. Growth has slowed. In March 2016, the Office for Budget Responsibility (OBR) predicted growth would be 2.2% in 2017. This has been downgraded to 1.4%. Mr Hammond acknowledged that this is “slower, of course, than we would wish, but still equivalent to the IMF's forecast for Germany, and higher than the forecast for growth in many of our European neighbours, including France and Italy.
Brexit, the fall in sterling and higher inflation have contributed to a slower growth forecast. It is set to increase to 1.7% in 2018 and 2.1% in 2019 and 2020.
WHAT ABOUT GOOD NEWS FOR BUSINESS OWNERS?
- As expected, the income tax threshold will rise from £11,000 to £11,500 in April 2017.
- The higher income rate threshold will increase to £50,000 by 2020-21.
- No fuel duty increases this year, cancelled for the seventh year in a row, which will save car drivers £130 and van drivers £350 in the next year.
- Unfortunately, insurance premium tax is set to rise from 10% to 12% in June, which on average will cost drivers and businesses with cars an extra £25.00 per policy. Home, buildings and pet insurance are also taxed at the same rate.
- However, there is more good news! A national productivity investment fund of £23 billion, for innovation and infrastructure over the next five years. Borrowing will increase, but the Chancellor sees this as a critical for jump-starting productivity and not leaving businesses and infrastructure without the sort of funding many have received from EU sources in recent years.
- Another £1 billion will be invested in digital infrastructure, to get the country on a 5G network, whilst all business fibre investments will receive 100% rates relief.
- Local Growth Fund will put another £1.8 billion into key local regions.
- UK export funding is set to double, so good news for UKTI.
- The government is also getting involved in venture capital, with £400 million flowing into the British Business Bank, that will help unlock £1 billion in finance for growth companies.
- Rural Rate Relief will increase to 100%, “giving small businesses a tax break worth up to £2,900.”
- Employee and Employer National Insurance thresholds will equalise at £157 per week in April 2017.
- And finally: More good news for business owners. Corporation Tax will fall to 17% in 2020.
The government now has a year until the next budget, which gives time for Brexit to happen - or not, depending on the courts and parliament - with Spring 2017 a statement, instead of a full budget. This was the last Autumn Statement, with the main budget now moving to this time next year.
Despite the uncertain headwinds, the government is using the levers it has to calm the economy and ensure growth continues.
Disclaimer: We hope you found the information in this article useful and informative. Please remember that this is an article and is no substitute for professional advice on taxes, your business or personal finances.