Autumn Budget 2018 – What it Means for Britain in Business
With Brexit a matter of months away, this year’s Autumn Statement was perhaps one of the most crucial in recent history, marking a new chapter for the British economy and departure from the EU – complete with commemorative 50p coin. But silver mementos aside, what does Philip Hammond’s Budget really mean for SMEs of the UK as we batten down the hatches for 2019 and beyond? From revised rates to taxation, we run through its key points for Britain in business below.
An End to Austerity
Despite the UK’s economic growth forecast dipping from 1.5% this March to 1.3% (the dismal spring weather said to blame) the future looks bright; next year, it is thought this will increase to 1.6%. With up to 800,000 more jobs predicted by 2022, employment will also be on the rise as wage growth remains the highest in almost a decade. As of April 2019, the National Living Wage will increase from £7.83 to £8.21 per hour. Set to benefit 2.4 million workers, this equates to a £690 yearly pay rise for those in full-time work.
> What this means: With the National Living Wage on the rise, growing SMEs will need to make the appropriate considerations as they continue to invest and evolve their workforces.
Small Business Wins
As bricks-and-mortar brands continue their fight to bounce back, the Chancellor revealed a £675m boost to local high streets. This will go towards redeveloping empty premises, restoring old buildings and improving transport links. Where rates are concerned, £900m worth of relief for small businesses was announced. For companies with a value of £51,000 or under, this bill could be cut by a third over two years. So much so that 90% of independent shops, including restaurants and pubs, could have their bills reduced by up to £8,000.
> What this means: SMEs valued at £51,000 and under can take advantage of the reduced business rates and should consider how best to re-invest this annual saving.
Support for Apprenticeships
With T-level vocational training already introduced and £100 million invested in the new national training scheme, the Chancellor announced a further £695 million package to help the UK’s apprentices. For larger businesses with an annual payroll of £3 million or more, 25% of the apprenticeship levy can now be invested in these trainee employees (up 15%); for SMEs with funds generated by the levy, the 10% fee they currently pay will be halved to 5%. With full details to be confirmed in April 2019, levy changes will be revisited once again come 2020.
> What this means: At a reduced fee of just 5%, now is the opportune time for small businesses to access the funds generated by the levy for apprenticeship training.
With an increase of £650 by April 2019, the Personal Allowance will rise to £12,500 – a year earlier than expected. For basic rate tax-payers, this will mean £1,205 less tax between 2019 and 2020. For those paying tax at 40%, the Higher Rate Threshold will also increase from £46,350 to £50,000 from April next year. A new addition to this year’s Budget includes the digital services tax. Where tech giants are concerned, a 2% tax will come into effect from April 2020, where search engines, social media channels and online will be taxed on UK-linked revenue.
> What this means: For SMEs with a salaried workforce, the Higher Rate Threshold changes could incentivise employees to commit for the long-term, and if investment allows, progress their roles further.
Improved Transport Links
With the country’s first advanced railway system – High Speed 2 (HS2) – still firmly on the cards, the Budget certainly remained ample where UK transport was concerned. For train travellers, a new 26-30 Railcard will go on sale across the UK this year. In addition to railroad developments, a huge £30 billion was declared to help improve the roads of Britain, including a £28.8 billion National Roads Fund, and £25.3 billion for motorways, trunk and A roads (the Strategic Road Network). Local roads will also benefit from the new Major Road Network, with £420 million committed to local authorities to renew bridges, tunnels and potholes.
> What this means: For business owners (and their employees) aged 26-30, subsidised rail fares can help keep commuting costs down. Investment in nationwide smart motorways will also continue to smooth out travel disruptions.
Addressing Mental Health
Facing the nation’s mental health issues head on, this year’s Budget has, most importantly, earmarked a minimum of £2bn per year towards mental health facilities; this will form part of the £20.5bn (after inflation) promised to the NHS over the next five years. Not only will this mean increased mental health services such as a dedicated 24-hour crisis hotline, but will also include specialised mental health ambulances and nationwide crisis centres in the event of an emergency.
> What this means: With 1 in 6 workers affected by mental health, wellbeing in the workplace should be a priority for SMEs moving forward. Investment in mental health services will make resources more readily available, with not only dedicated charities but the government now in full support.
And what of the elephant in the room? With £1.5 billion already announced to help departments prepare for Brexit, the government will provide an additional £500 million of additional funding from 2019-20. With over £4 billion set to be invested in this transition, it would seem that for this year’s Budget, our departure from the EU is of tantamount importance.