Request Information Pack

Enter your contact information below and we will send you an Information Pack

What does the 2018 Budget mean for small businesses in the UK?

As the Chancellor unveiled the 2018 Autumn Budget, the final one before Brexit in March 2019, there were various nods towards small businesses in the UK. These range from personal tax allowance increases to business rate help.

Mr Hammond began his opening speech saying that it would be “a Budget for hardworking families… the strivers, the grafters and the carers who are the backbone of our economy.”

Personal Tax Allowance

This is the amount of money workers can take home without paying tax on it. Any amount above the Personal Tax Allowance rate is taxed. The rate is variable, depending on the total income of the person.

The Budget raises Personal Tax Allowance to £12,500 for basic rate tax payers, and to £50,000 for high rate tax payers next year. At the moment, the standard personal allowance is £11,850.

Cash for the UK’s High Streets

For small business owners operating from a bricks and mortar retail space, the Budget introduces the Future High Streets Fund. This consists of £675 million of funding for local councils to apply for. The idea is that it will go towards planning for the future of the High Streets, which are increasingly empty.

Mr Hammond specifically said that it should be used for converting commercial premises into residential properties. This, he claims, would increase footfall and counter the rise of online shopping.

Savings for independent businesses

Up to £8,000 of savings will be introduced for the very small businesses, according to Mr Hammond. He says that he will cut business rates for businesses with a rateable value of £51,000 and under. This will mean their bills will be slashed by a third during the next two years.

Digital service tax

There were worries before the Budget was announced that an alleged new digital services tax would negatively affect small businesses. This was a particular concern for online retailers. However, the announcement only applies to global businesses that generate a massive amount of sales. It’s not yet certain whether this could affect small businesses that sell through large retailers, such as eBay and Amazon.

Green taxes

Just one tax was introduced in the Budget to cover environmental concerns. Companies that manufacture plastic made from less than 30% recycled material will face a charge. This could affect small businesses, depending on their product and sector.

Other changes that could impact small businesses

The main takeaways from the Budget that will affect small business are covered above. However, small business owners should also be aware of the following:

  1. The annual investment allowance increases from £200,000 to £1 million for two years.
  2. Small businesses only have to contribute 5% to the apprenticeship levy.
  3. All toilets available to the public will mean new business rate relief, whether they are privately or publicly owned.
  4. England’s roads will receive a £30 billion relief package for repairs to potholes and bridges.
  5. Fuel duty will continue to be frozen. This will save van drivers about £2,500 and car drivers about £1,000.
  6. No changes to the VAT threshold.
  7. National living wage will increase to £8.21.
  8. Duties on cider, beer and spirits will be frozen.

James Turner, Managing Director of Turner Little Limited says: “Taken at face value, it appears that the Government sees the importance of small businesses thriving. They form the backbone of the UK’s economy, and as we continue through uncertain economic and political times, I hope that this support also continues.

“It’s important to understand the implications of the 2018 Autumn Budget, of course. However, it’s also important to note that the Chancellor himself announced that should the UK leave the EU without a deal, then this Budget will be scrapped. The major announcement in the Budget is the so-called “end to austerity”, but if negotiations continue to stall, this won’t be the case.

“As the business world waits for the Government to provide clarity on the exit deal, it’s becoming more likely that we will all face a no deal scenario. In which case, we will be waiting for a completely different set of Budget announcements.”

About Turner Little

Founded in 1998 in Yorkshire, UK, Turner Little is a specialist UK and offshore company formation, banking and corporate services provider. Our services include company formation, UK and offshore banking, asset protection, credit correction/repair, trademarking and trusts. Other services include Internet services, mail forwarding, wills and probate. Turner Little’s vision is to offer the best possible service, together with market leading products.

Turner Little and its affiliates do not provide tax, legal or accounting advice. Material on this page has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.