This year’s Budget came and went with the usual fanfare. But what sits behind all that and how are the announcements that were made likely to affect you and your business? This month we take a look at the outcomes of the Budget and what it may mean for your business.
The state of the economy
Overall, the news was very positive. Public debt is lower, having peaked in 2016-17, and continues to be reduced. This allows public spending to grow and it is projected to do so by a rate of 1.2% above the rate of inflation per year until 2023-24. Employment is almost at a record high and the economy is projected to continue the growth it started in 2010. Coupled with a drop in unemployment – to the lowest it has been in the last four decades – the forecast is for 800,000 new jobs to be created in the next four years.
Funding and investment
Funding to key public sector bodies such as the NHS, social care, and education will increase by £20.5 billion, £650 million, and £400 million respectively. The borrowing cap on local authorities will also be lifted, allowing for borrowing in order to build housing. The Annual Investment Allowance, which can be accessed by companies to help them invest and grow their business, will increase from its current level of £200,000 to £1 million from January 2019 and will be available until December 2020. Effective immediately, companies will be able to deduct a percentage of the cost of new non-residential buildings – up to 2% – before tax is applied to their profits.
Taxes and rates
Business rates for small retailers will be reduced from April 2019 by up to a third for the next two years. Those businesses that rely on road or air transport are expected to gain from the continued freeze on fuel duty and short-haul Air Passenger Duty, the ninth and eight years in a row respectively. For those who are self-employed, the change to the personal tax allowance will be welcome – rising to £12,500 from April 2019 – while the higher rate income tax threshold will increase to £50,000. Employers will need to budget for a rise in the National Living Wage though which will rise to £8.21 per hour from April.
There are also changes to the apprenticeship levy. Some employers will have the amount they pay for training apprentices drop from 10% to 5% with further details expected on this early in the new year. Larger businesses will also be able to invest a proportion of their apprenticeship levy – up to 25% – to support apprentices through their supply chain.
The Budget and its implications can be a confusing time for businesses, particularly for those smaller organisations or those who are self-employed. If you would like any help or advice navigating any of these changes and how they may affect or benefit you, talk to us at Hammonds Accountants. Call or email us on 020 8249 6328 and and we will make sure you make the best of the changes in this year’s Budget.