The Autumn Budget is dissected for the benefit of your business in our latest handy B2B blog.
Chancellor Philip Hammond’s second budget since coming into post revealed that economy growth has slowed to 1.5% in 2017. This was the big news that somewhat overshadowed the subsequent list of policies and announcements. His previous forecasts for growth have been quashed by the independent Office for Budget Responsibility (OBR).
This was the main headline, despite Mr Hammond’s big reveal of the day, which signaled the demise of stamp duty for first time buyers of houses under £300,000.
But what about businesses?
Fear not! GAS, as always, has its ear to the ground for your benefit. Here are our top takeaways for your business:
The National Living Wage is going up
A 4.4% increase in the National Living Wage will be introduced from April 2018, rising from £7.50 to £7.83 an hour. Great for employees, but it will have an impact on businesses.
What this means for you: Your wage bill is about to be bumped up slightly for those workers on or below the government’s Living Wage. This sector constitutes 1.3% of the UK population in full-time employment (Office for National Statistics) and 2.4% in part-time employment.
According to The Office of National Statistics’ 2016 figures, the industries with the highest proportion of people on low-pay jobs are hairdressing (7%) and childcare (4%). Meanwhile, retail (approx. 67,000) and hospitality (approx. 59,000) have the hightest volume of staff on low-pay jobs. These are the sectors who should recalculate their wage bill in light of the budget.
VAT threshold to stay the same
Currently, small businesses pay VAT if their annual turnover is above £85,000. There was speculation that this might decrease to generate more revenue for the government, but chancellor Hammond has confirmed that it will remain the same.
What this means for you: Good news for small businesses, who the chancellor singled out to receive some help today. Widely dubbed “the backbone of the British economy”, the government can ill afford to upset the SMEs.
Business rates change brought forward to April 2018
In a move the government claims will save SMEs £2.4 billion, the uplifting of business rates in line with CPI instead of RPI has been brought forward by two years. The £1,000 discount promised to small pubs has also been extended to March 2019.
FURTHER READING | HOW WILL THE INTEREST RATE INCREASE AFFECT MY BUSINESS?
Digital Royalties to be taxed
At the moment, digital royalties paid to low-tax jurisdiction territories from UK sales are not taxed. They will be, however, under a new tax rule.
What this means for you: Very little, unless you’re reading this from Google, Amazon, Apple etc. Much has been made in the media of the digital super-companies dominating the business world and their tax practices. The government is about to get tougher and expects to raise £200 million from the new tax on UK revenue declared abroad.
Broadband and 5G investment
After singling these areas out for investment in the year’s earlier budget, chancellor Hammond today announced that the government will invest a further £500 million in 5G and full-fibre broadband.
What this means for you: It is inevitable that your workplace will be accumulating more devices using data with the development of the “Internet of Things” and dramatic increases in the popularity of streaming and consumption of online and video content. The UK’s infrastructure must be able to keep up. More devices consuming more data per device means that the network needs to be able to transmit more data, faster. At the moment, the average UK resident can only access 4G 53% of the time (Wired:2017) – so there’s some way for the country to go.
If your company has competitors outside of the UK, you’ll be wanting us to stay at the forefront of this driving force of global business.
Electric vehicles get more support
£400 million more of funding has been announced to develop an infrastructure to support a future suitable for electric vehicles.
What this means for you: If you have pool cars for staff to use, or are considering investing in a fleet, electric vehicles should be becoming a serious consideration. With inefficient diesels quickly becoming taboo, the tax breaks, easier charging and good PR that come with an electric fleet are looking ever-more attractive. They’re also becoming a lot more attractive to look at – see Tesla’s range of all-electric vehicles.
If you still have any concerns over the budget and would like to talk about it further, feel free to contact us on 0800 130 3514.