One of Hull and East Yorkshire’s leading firms of accountants, Smailes Goldie Group, says many small businesses are likely to feel let down by the Chancellor’s latest Budget as it offers little assistance to the nation’s economic backbone.
Philip Hammond declared that his Budget would signal that “the era of austerity is finally coming to an end” and highlighted better than expected GDP growth for the UK, but despite the many positives to come out of his statement, Smailes Goldie Group said small businesses expected more.
Steve Bramall, Partner at Smailes Goldie Group said: “What with the difficulties and uncertainties of Brexit and the importance that small to medium-sized businesses (SMEs) play within the wider economic picture for the UK, we would have expected to see more measures to support their growth, but the Budget was certainly lacking in this area.”
Steve Bramall points out that business owners would, for instance, see the qualifying period for Entrepreneurs’ Relief extended from one to two years, which will generate an additional £90 million by 2023/24 for the treasury and affect businesses tax planning opportunities.
“Businesses are also unlikely to welcome increases in the National Living Wage (NLW) and National Minimum Wage,” said Steve Bramall.
“The NLW, in particular, will rise to £8.21 from April 2019 – an increase of 4.9 per cent. This will have an immediate impact on many employer’s wage and workplace pension bills.”
Smailes Goldie Group said that smaller giveaways, such as placing a freeze on the VAT threshold and fuel duty would also be beneficial, but added that many SMEs had hoped for more.
“While the Budget was fairly lacklustre for SMEs, the increase in the Annual Investment Allowance, from £200,000 to £1 million over the next two years will help businesses to invest in new plant and machinery and an additional £1.6 billion in funding for advanced technology should trickle down to smaller firms over time,” added Steve Bramall.
Looking at personal taxation, Smailes Goldie Group said that individuals will gain from increases to the Personal Tax Allowance and Higher Rate Income Tax Threshold.
However, those invested in the property market could face new taxes, which could limit their returns including changes to private residence relief for owner-occupiers.
Steve Bramall said: “From April 2020 the Government will reform lettings relief so that it only applies in circumstances where the owner of the property is in shared occupancy with the tenant. The final period exemption will also be reduced from 18 months to nine months.”
Steve Bramall added that consultants and sole traders working in the private sector through a personal service company should also be aware that the complex IR35 rules could apply to them from April 2020 if they work for a medium to large-sized business.
Smailes Goldie Group
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