Business reacts to Autumn Budget 2017
ICAEW Head of Enterprise Clive Lewis gauges the business reaction to the Chancellor’s Autumn Budget, and finds relief amid EU worries.
The Federation of Small Business (FSB) relief at the chancellor not lowering the threshold for compulsory VAT registration for the current limit of £85,000 to the level suggested by the Office for Tax Simplification of £20,000, was manifest.
Mike Cherry, FSB National Chairman said: “Dragging thousands of more small firms into the hugely complex VAT regime would have caused a significant drag on output at an already challenging time for businesses. Small firms spend more than a working week a year complying with VAT obligations on average. It’s time that should be spent growing their firms”.
The other good news in the Autumn Budget was the business rate increase from April 2018 being changed to the Consumer Price Index (CPI) from the Retail Price Index (RPI). This will have the impact of lowering the increase by 1%.
The chancellor also announced that business rates would be revalued every three years instead of five years at present. In addition, pubs in England will continue to receive a £1,000 business rates discount in 2018/19.
The Confederation of British Industry (CBI) Director General Carolyn Fairburn said: “This shift in inflation indexation will help boost the competitiveness of businesses with a physical presence, particularly in the retail and manufacturing sectors. However, further reforms are needed to keep this tax in step with the modern economy.”
Perhaps the most significant announcement was an extra £3bn to ensure government is ready on Day One of exit from the EU. This includes funding to prepare the border, the future immigration system and new trade relationships.
The CBI Director General’s comment on this was: “Businesses will welcome the government’s commitment to provide additional resources to manage Brexit. However, securing a transition deal at the next EU Council meeting remains firms’ number one priority.”
Apart from the measures outlined above, business will be disappointed that there was no increase in the allowances for businesses investment in plant and machinery such as the Annual Investment Allowance. Business investment is slowing and the absence of any further incentives will probably mean investment continuing to drop at least until the uncertainty over Brexit and the impact of inflation on consumers ceases.
Read the ICAEW’s reaction to the Autumn Budget.
Clive Lewis is ICAEW Head of Enterprise
Liked this? Read these: