Philip Hammond’s Budget in March was seen by many as a thinly-veiled attack on small businesses and self-employed workers. Mr Hammond’s first Autumn Budget was his chance to make amends with those who had been on the receiving end of his less popular decisions earlier on in the year. In many ways, the Budget delivered by the Chancellor on 22nd November attempted to do just that.
Key Budget Announcements:
One of the key announcements was to keep the VAT threshold at £85,000 until 2020. The threshold remains one of the highest for VAT anywhere in the world, with the average across the EU coming in at just £20,000. The Office of Tax Simplification recommended the UK reduce the figure to £25,000 It was estimated that this would bring up to 1.5 billion small businesses into the VAT system and earn the government £2 billion annually.
The Chancellor’s decision to bring forward the move from using Retail Price Index (RPI) to Consumer Price Index (CPI) by to April 2018, will also be popular. This will scrap the rise for business rates originally planned for April. Using CPI will avoid adding £781 million to bills over the next two years. He also announced that the revaluation periods for business rates would be reduced from five years to three. This will hopefully avoid the problems experienced earlier in 2017, when rates were revalued for the first time in seven years.
Another welcome move from the Chancellor was the abolition of the ‘staircase tax’ introduced in August this year. This meant that businesses operating in offices over several floors were assessed for business rates separately for each floor (rather than receiving one bill for the premises overall). This was widely criticised for unfairly targeting firms with separate offices in communal buildings. The reinstatement of the original bills, is a decision Mr Hammond surely hopes will put him back in the good books.