Autumn Budget 2018 – what will it mean for businesses in the South?
Businesses in the South should see the Autumn Budget as a welcome confidence boost at a pivotal economic moment as Britain prepares to leave the EU, says leading accountants and business tax advisers HWB.
But the accountancy practice warns there are a number of reforms that will have a lasting impact on the private sector and businesses will need to prepare for their implementation.
HWB has now produced a definitive, practical guide to help business leaders understand how the announcements will affect their financial situation and prepare now to achieve compliance.
In what was one of the most eventful Budget speeches for several years, Chancellor Philip Hammond set the stage for the “end of austerity”, bolstered by revised growth forecasts from the Office of Budget Responsibility. There were commitments to increased public spending on emotive issues such as schools, high streets, hospitals, village halls, potholes and public toilets.
Promoting business growth and protecting the interests of SMEs at this politically-sensitive time also featured heavily – and there were several positives to take home, says HWB Director Michaela Johns.
“This Budget marks a clear shift in fiscal direction from the Government following an eight-year austerity programme,” says Michaela, who specialises in advising SMEs across Hampshire, Dorset, West Sussex and Wiltshire.
“There are a number of announcements that will be broadly welcomed by the business community in the South.
“The Annual Investment Allowance being increased from £200,000 to £1m for two years, together with business rates being cut by a third for small companies, will reduce the financial burden on many businesses and potentially give some ‘breathing space’ to allow for growth and innovation.
“It comes at a crucial time as many businesses are still holding back on future investment because of the uncertainty surrounding Brexit.
“The South is a thriving hub for entrepreneurial start-ups and I’m pleased to see that the Entrepreneurs’ Relief stays in place, albeit under tighter controls which will have to be carefully monitored by businesses.”
Reforms to the IR35 tax framework in the public sector will now be extended into the private sector and Michaela says business decision-makers will need to prepare. Large and medium-sized companies in the private sector will now have an obligation to check whether any contractors they use should pay tax under IR35 – designed to clamp down on self-employed workers who should be treated as employees. The burden of responsibility was put on public sector providers in April 2017 in a bid to ensure that contractors who work through their own business – but are in reality employed by a third party – pay correct and full taxes.
Michaela says: “Businesses in the private sector will welcome the delay of these changes until April 2020 as it could have a significant impact.
“The nature of contractors’ relationships in the private sector is often more complicated than in the public sector and we will need to keep a watchful eye to see how these rules are implemented in practice. Employers could now face financial penalties if they wrongly identify a worker as self-employed instead of employed, so robust compliance will be key.”
Michaela welcomes the “plastics tax”, adding: “I believe this is the first step towards a tax system on single-use plastics and I’m keen to also see an emphasis on driving businesses forward to become more environmentally-friendly.
“Overall this budget should give a welcome confidence boost to SMEs in the South. It would seem that budgetary discipline has allowed the Chancellor to make much needed contributions to public services, without adversely affecting entrepreneurs’ taxes rates. However, the devil is in the detail and we will need to analyse the papers in full to see the true picture and how it will translate for businesses in the South.”