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Was the Budget small business friendly?

From the high street to Entrepreneurs Relief, ICAEW Head of Enterprise Nick Levine unpicks what the November Budget means for small businesses.

Nick Levine

December 2018

The 2018 Budget, the first held in November since 1962, contained a surprising number of giveaways off the back of the UK economy performing slightly better than Office of Budgetary Responsibility (OBR) forecasts. In some respects, it was the most business friendly budget for a while, with measures introduced acting as stimuli for business to take on more employees and make investments for the long term.

Save The High Street

The high street has had a particularly tough time of late due to business rates, the increasing propensity for consumers to shop online and difficulty in fulfilling vacancies due to migrant staff leaving the UK in the run up to Brexit.

In response, the Chancellor has introduced a £675m Future High Streets fund which will be used to re-energise local high streets by bringing disused properties back into use as offices and cultural venues, as well as investing in town infrastructure to improve access.

Reduced Business Rates

The high street, as well as a proportion of small companies at large, will benefit from a cut to business rates for those with a rateable value of under £50,000. This will be introduced from April 2019 and will last for two years.

Annual Investment Allowance

The annual investment allowance is being increased from £200,000 to £1m. This will come into effect from January 2019, with the expectation that it will encourage businesses to invest in capital equipment and improve their productivity.

Employers Allowance

From April 2020 the employment allowance, which allows employers to claim back class 1 NICs of up to £3,000, will only be available to companies with an NIC bill below £100,000. But this means that 93% of small employers to still be eligible for the tax cut.

Entrepreneurs Relief

In the run up to the Budget it was rumoured that Entrepreneurs Relief would be scrapped. Instead, it has been tweaked with the minimum qualifying period increased from 12 months to two years. The measure allows individual business owners, with at least 5% ownership, to benefit from paying capital gains at a reduced rate of 10%.

It is reassuring to see a Budget heavily geared towards small businesses, which are the lifeblood of the economy. At least in the short term, prior to Brexit day, this will give the business community some peace of mind that their needs are being considered.

Nick Levine is ICAEW Head of Enterprise.

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