Budget 2018: Tax and business round-up
At a time of political and economic uncertainty, the announcement of several substantial measures in the Budget on 29 October 2018 came as a surprise for many businesses.
In fact, the Budget was met with an overall positive reception from industry groups, with the FSB calling it the Chancellor’s “first small-business-friendly Budget”.
A range of measures were announced to support high street businesses, including a reduction to business rates by a third for many independent shops, pubs and cafes with rateable values below £51,000.
This will apply for two years from April 2019, subject to state aid limits.
Pressure was also eased for smaller firms funding apprenticeships, as the co-investment rate required for training will be halved from 10% to 5%.
Meanwhile, businesses investing in plant and machinery were boosted by the annual investment allowance rising from £200,000 to £1 million for a two-year period from 1 January 2019.
Employers will need to pay attention to the national living wage when planning for next year, which is set to increase from £7.83 an hour to £8.21 an hour from 6 April 2019.
The VAT-registration threshold was frozen at £85,000 until 1 April 2022, with the Government planning to review it once the terms of the UK’s exit from the EU have been confirmed.
Suren Thiru, Head of Economics at the BCC, said:
“We are pleased that the Chancellor listened to our call to keep the VAT threshold unchanged over the near term, providing much-needed certainty to firms across the UK.
“A reduction in the VAT threshold could well have proved to be a tipping point for some of our most promising young firms.”
For some, however, the Budget wasn’t all good news, as the Chancellor confirmed that reforms to the off-payroll working rules – known as IR35 – will be extended to the private sector in April 2020.
The responsibility for operating these rules will move to the firm engaging the worker.
Chris Bryce, chief executive at the Association of Independent Professionals and the Self-Employed, called the IR35 rules “complex and crude”, and warned that genuinely self-employed people could be impacted.
To ease some of the burden, small organisations will be exempt, while medium and large organisations will be given support and guidance by HMRC.
Speak to us about how these measures affect you.