Spring Budget 2017
Posted by Rachel Flower / March 11th, 2017 / No responsesThe best place in the world to start and grow a business?
Here at Serenwood we pride ourselves on not being typical lawyers and prefer to live our professional lives in full colour rather than in black and white pinstripes. So I have to confess, that reading the detail of any budget can be enough to have me heading off over the fields surrounding our lovely Sicklinghall offices!
The news has been full of reports, opinions and summaries.
In a short space of time, much has already been said to the effect that the Spring Budget 2017 is a sting to entrepreneurs and contrary to Hammond’s pledge to make the UK the best place in the world to start and grow a business.
Much of the discussion has centred on the changes to National Insurance contributions from the self-employed.
Hammond highlighted a dramatic increase in the number of people classed as self-employed – a 20% rise since 2008, with the sector now accounting for 15% of the national work force. The Prime Minister described this as “eroding the tax base”. The Spring Budget looks to address this. Accordingly, those who are self-employed will be disappointed that the tax savings from increases in the personal allowance will be affected by a rise in Class 4 National Insurance contributions.
To close the gap in the amount of NI paid by employed workers, those who are self-employed will pay an extra 1% in 2018-19 (10%) and a further 1% in 2019-2020 (11%). Essentially, if people are choosing to be employed or self-employed, it is unlikely now that NI considerations will be the deciding factor.
We don’t know about you but here at Serenwood, it isn’t the money which motivates us. Yes, we are ambitious and all want to do well, but what really gets us going is enjoying our lifestyle choice and above everything else, genuinely making a difference. We are delivering professional services in a joyfully disruptive way, helping SMEs access years of legal expertise they would not normally be able to afford and we provide that legal expertise in a new, refreshing way. That’s what gets us up in the morning – not the level of our NI contributions.
We don’t disagree that the changes break manifesto promises, are perhaps counter-intuitive and seemingly contrary to strategies to stimulate growth, but we are glass half-full sorts of people, and are looking at our bigger picture….
Do you feel the same? We would love to hear your “why”….
In the meantime, let’s run through the other key messages for business owners/entrepreneurs:
Reduction in the Dividend Allowance: Perhaps the surprise news of the Spring budget 2017 was that the tax free dividend allowance will be cut from £5,000 to £2,000 from April next year. There is still this year to take advantage of. Here at Serenwood, we can help ensure that the shareholding of your business is structured in a way to enable you to do so.
Wages: The national living wage will rise from £7.20 to £7.50 an hour from next month. This is equivalent to a pay rise of more than £500 per annum for a full time worker. Factor this in to your forward recruitment plan.
There is some potentially good news too:
The Economy: Projected growth for this year was revised up from 1.4% to 2%. And yes, we know that the figure for next year and for 2020 has been slightly downgraded – but as we say, with positive thoughts come positive reactions and so for today, we will focus our thoughts on the increase for this year and the hope this growth brings for further inward investment.
Corporation tax: for anyone running their business through a company, you can be boosted by the fall in corporation tax to 17% by 2020
Business Rates: with the revaluation of business rates causing widespread criticism, Hammond has sought to soften the blow. Whilst many think that he could have done more, there will be a £300m fund to enable local authorities to provide discretionary relief. Additionally, small businesses due to lose their rate relief will have their increases capped at £50 per month. There is further help for pub businesses.
Making Tax Digital: the Spring budget announced a delay of one year to April 2019 for the introduction of Making Tax Digital and quarterly reporting for businesses under the VAT registration threshold. This gives small business much needed breathing space ahead and time to make the necessary changes to their reporting systems.
Research & Development: The Spring budget announced an increased investment in innovation and a review to enhance R&D tax incentives and in particular to improve certainty around claims and to relieve the administrative burden. Here at Serenwood we love to work with innovative, ground breaking businesses and with IT experts amongst us, have strong relationships with various tech companies. These announcements are an encouraging signal about the government’s commitment to maintaining Britain’s competitiveness in a fast paced ever changing world.
So, whilst there has been a mixed bag of reactions to this week’s budget from entrepreneurs, business owners and industry experts, we say, let’s put on the kettle for a cup of Yorkshire Tea, admire the shoots of new growth in the Spring sunshine and glide on. We feel privileged to be able to contribute to the economy and we love the clients we work with and the difference we make. There is always opportunity and for so long as there is entrepreneurial spirit and determination, there is always a way.
Which reminds us. Our Get-Savvy Business Club is launching on 1st April so if you know any small business owners who want to get access to no-nonsense, practical legal support with their growth plans…then send them our way.
