Paul Caunter reviews the 2018 Autumn Budget and explores the measures most likely to affect SMEs:
In Philip Hammond’s Budget announcement yesterday, the last before Brexit, he declared that ‘austerity is coming to an end, but discipline will remain’. Over and above plans to boost public services, there were several measures of interest to the business world and SMEs in particular.
- Annual Investment Allowance (AIA) increase
Currently, the tax-free amount that businesses can spend on building and machinery is £200,000. From 1st January 2019, this will increase to £1m for a two-year period. This will be welcomed by UK businesses and is likely to encourage spending and investment on fixed assets. For those businesses with accounting periods straddling the 1st January date, it could lead to some complex calculations. Further information is provided on the Gov.uk website here.
- Business rates cut for retailers
All retailers in England with a rateable value of £51,000 or less will have their business rates cut by a third. The move is expected to benefit around 90% of all independent shops, pubs, restaurants and cafes. A further £675m has been pledged for a Future High Streets Fund to help councils rejuvenate high streets.
- Apprenticeships fee halved
It was announced that the 10% fee that small businesses must pay to contribute to training when they take on apprentices will be halved to 5% as part of a £695 million package to support UK apprenticeships.
- Personal Allowance threshold increases
The Chancellor is raising the tax-free personal allowance threshold to £12,500, and the higher rate threshold to £50,000, bringing forward a former pledge to raise the thresholds from 2020. The Treasury says the move will cut taxes for 32m people.
- Brexit preparations
In light of growing uncertainty about Brexit, Mr Hammond announced an extra £500m to prepare for the possibility of the UK leaving the EU without a deal. Faced with this scenario, he has acknowledged that a whole new Budget would be required. He also promised a ‘double deal dividend’ if the UK and the EU reached agreement over Brexit, which could result in further spend on public services.
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