The top 8 implications of the Autumn Budget for SMEs

Published on 22 November 2017

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Understanding the finance implications for small and medium sized businesses

I have not witnessed a Budget speech with so little directly in it for businesses, particularly for those in our area; however, there may be some longer term changes for the knowledge economy that may well be of benefit.

To help understand the key implications that small and medium sized businesses should know about, I’ve detailed the key items announced today in the Autumn Budget 2017:

Stamp Duty Land Tax

The big announcements were in respect of housing, with the Stamp Duty Land Tax exemption of £300,000 for first time buyers being the headline announcement. However, whilst 300,000 more houses per annum is what experts believe we need, what actual impact will the SDLT relief have? There is much analysis that suggests that all that happens is the price for properties in this price range increase because of the SDLT saving.

SME builders

We need to see the finer detail of how the help for SME builders will work. One of the biggest issues is that these builders often have difficulty in obtaining finance. The change to tax on liquidations in 2015 hit this sector hard, as it created uncertainty as to the tax treatment on exit for investors. One of the biggest helps here would be for HMRC to give real guidance on how this rule affects this sector.

Supporting the knowledge based and tech business sector

Spreadsheet Phil also made a big play on supporting the knowledge based and tech business sector. The speech itself gave little detail as to how this would filter down – there was much talk of plans and consultations, and public-private partnerships, but little concrete detail.

National minimum wage

Business will have planned for the increase in National minimum wage next spring, and this has been confirmed.

Change to the calculation of business rate

There is a welcome change to the calculation of business rate increases (to the lower CPI rather than RPI), but the increase in business rates will now happen every three years, rather than five. This was presented as a benefit to business!

Increase in EIS limits for tech companies

The increase in EIS limits for tech companies is welcome; but there are restrictions on EIS where they are lower risk. The definition of risk is to be what is considered ‘reasonable’. This can only add to complexity.

How to deal with off-payroll working

Further down the line, there will be a consultation on how to deal with ‘off-payroll working’ and how this will be extended to the private sector. This has been a big issue for the public sector already in dealing with these changes. We can expect similar administration burden for those in the private sector as well.

‘Big numbers’

Whilst there weren’t many headline measures, it’s always interesting to look at the bigger numbers in the Treasury’s Red Book. Here we see how the Budget will actually impact.

The abolition of indexation allowance (an allowance for inflation on cost for companies when they sell an asset) will save over £0.5bn pa.

The SDLT relief for first time buyers will cost a similar amount. If we say that the average SDLT for a first time buyer would be say £5,000, this implies over 330,000 first time buyers each year.

The change for business rates increase to CPI from RPI will save in total £0.5bn pa.

The really interesting one will be the National Productivity Investment Fund which will cost £7bn but only in 2022/23. If it’s that important, perhaps we should have it earlier.

Perhaps the maths does matter!

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