For a Chancellor dubbed ‘Spreadsheet Phil’ by the popular press, this week’s Budget packed quite a punch.
Understandably many businesses are feeling very nervous about the planned hike in business rates.
So I was particularly pleased to see that the Government is to provide £435m for firms affected by increases in business rates. There will also be a £300m hardship fund for small businesses worst affected.
Pubs with a rateable value of less than £100,000 will also get a £1,000 discount on the rates they pay while any business losing existing relief will not pay more than £50 a month.
However, we mustn’t forget that the Chancellor’s actions are only aimed at mitigating a planned increase for many.
I was disappointed to see an increase in the main rate of Class 4 National Insurance contributions for the self-employed, a sector often regarded as the ‘engine room’ of the economy.
The main rate will rise by one per cent to ten per cent in April 2018 and 11 per cent in April 2019.
According to Philip Hammond, the increase will raise £145m a year by 2021-22 at an average cost of 60p a week to those affected.
That may not sound a lot but haven’t we heard this before on other increases? The words ‘stealth tax’ come to mind.
Another measure which will hit particularly family businesses hard is the reduction in tax-free dividend allowances for shareholders from £5,000 to £2,000 from April 2018. I can’t help feeling it’s a somewhat mean announcement.
Other measures announced by the Chancellor include:
- An extra £2 billion for adult social care.
- A new minimum excise duty on cigarettes based on a packed price of £7.35.
- £300m to support 1,000 new PhD places and fellowships in STEM (science, technology, engineering and maths) subjects.
This was the last Spring Budget as from this year it will move to the autumn.
As with most Budgets it was a bit like the curate’s egg. Good in parts.