Delivering the Autumn Budget 2018 speech, Chancellor Philip Hammond won over small and medium-sized enterprises (SMEs) by introducing measures to support them and by levelling the playing field.
Benefits for SMEs
SMEs will benefit from the business rates cut, £675 million to improve high streets, increase in the annual investment allowance to £1 million, and progress in the taxation of large technology companies.
The Chancellor also announced that the apprenticeship training costs incurred by small companies will reduce from 10% to 5%. Many SMEs welcomed the move as the cost of training apprentices will reduce, encouraging them to hire and train more staff. They believe that the money saved on apprentice training can be used for extra benefits to the trainees, to help retention.
Other points from the budget
From April 2019, individual taxpayers can take advantage of the increased personal allowance, which will stand at £12,500, along with a higher threshold of £50,000. The self-employed will still have to pay Class 2 NIC.
Businesses will also benefit from the increase in the annual investment allowance, now raised to £1 million. The annual investment allowance can be used for upfront tax deduction from the business’ capital expenses on purchasing or upgrading machinery and plant. The measures are expected to encourage business investment in the short-term.
The business rate for retail properties, standing at £51,000, has been reduced, with the reduction applicable until the next business rate evaluation, in 2021.
The Autumn Budget 2018 saw the introduction of 2% capital allowance for non-residential buildings entering into contracts from 29 October 2018. It fulfils the demand from many businesses, as they believe it will spur investments into infrastructure.
Contractors working for the public sector through personal services companies were also affected by the budget. Now, the customer is responsible for deciding whether the contractor falls within the purview of IR35, requiring the customer to operate the NIC and PAYE. This regulation takes effect from 2020, giving businesses enough time to put necessary measures in place.
The bottom line
The Brexit negotiation is still a worrying factor as the UK government has not been able to thrash out a lucrative deal for the nation. This could affect procurement. So, the Autumn Budget 2018 is a short one and it is expected that the spring budget will be more comprehensive. The short-term respite that SMEs and businesses have earned will encourage consumer and business spending while the government works out a profitable Brexit deal.
Steve has over 28 years of success as CPO, MD and Procurement BPO leader in a range of industries. Steve is COO at Odesma, responsible for Odesma’s delivery capability & infrastructure.