2017 Spring Budget Update
- On March 9, 2017
- By GrowthInvest Admin
Presented yesterday was the Spring Budget and the new government’s vision on how to build a “stronger, better, fairer Britain”.
As promised Philip Hammond delivered his last Spring budget as chancellor of the exchequer now that there will only be one presented annual budget giving a longer-term outlook for implementing new measures.
We heard from Hammond on a general point that the government is committed to keeping Britain as a top global business destination. Soothing perhaps some of the uncertainty the market is experiencing in the days before the article 50 announcements.
With regards to mentions of the Enterprise Investment Scheme we received only moments after the official budget was released an update from EISA saying that even though the EIS wasn’t directly mentioned, point 3.13 Patient capital review (below) brought up that existing tax reliefs will be reviewed to ensure they are in-line with their original intention and will most likely be addressed in the Autumn Budget.
‘’The review aims to ensure that high growth businesses can access the long-term capital that they need to fund productivity-enhancing investment. Alongside identifying barriers to institutional investment in long-term finance, the review will also consider existing tax reliefs aimed at encouraging investment and entrepreneurship to make sure that they are effective, well targeted, and provide value for money’’
The chancellor addressed aspects of the industry starting with reducing annual dividend allowance from a £5,000 to £2,000 by April 2018, that may indirectly affect the SME sector. In the pursuit of fairness, Hammond removed the higher tax-free rate that was only first introduced at the beginning of the 16/17 tax year. Though we are just weeks away from an increased cap of ISAs to £20,000 and an estimation from the Treasury said only those investing a minimum of £50,000 outside their ISA would pay tax on dividends, equating to about 20 percent of investors.
Approximately 2.5m self-employed people will feel a general impact of the Spring Budget but more so from the broken conservative promise not to increase the National Insurance Contribution. This will mean an average increase of £240 a year.
For small businesses, there were three measures that will help facing increases in rates.
- Any business coming out of small business rate relief will not see their bill increase by more than £50 a month, and subsequent increases will be capped.
- A £1,000 discount for all pubs with a rateable value of less than £100,000.
- Local authorities will be given a £300m fund to deliver discretionary relief for ‘’individual hard rates’’.
Lastly, a change that raised an eyebrow with us was the commitment to make administrative changes to R&D credits to support investment and make it simpler for SMEs to access and claim.
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