Small business owners were big targets in today’s Budget, according to a local tax specialist.
Dave Masterson, who runs TaxAssist Accountants in Leighton Buzzard and Dunstable, said: “The Chancellor said this was a Budget designed to build an economy that works for everyone, but the five million small businesses in the UK who make a major contribution to the country’s economy, could be left feeling that they are shouldering more than their fair share of the financial burden.
“Philip Hammond stayed firmly on the Making Tax Digital road by giving small businesses with turnover below the VAT registration threshold a further year to comply with quarterly reporting to HMRC. Local businesses will still need to continue their vital progress on preparing for the new digital tax rules.
“New infrastructure spending on schools and housing is a welcome contribution to local economies, with many small businesses such as plumbers, electricians and decorators as well as those in construction reaping benefits.
“The continued freeze on fuel duty will also help many local business owners, particularly those which deliver products and services to our homes, where cars and vans are essential, not a luxury.
“The £500 million annual boost for technical education could also help many small businesses. The so-called T-levels in the catering, construction and digital technology sectors may improve the vital talent pool for local business owners looking to grow their teams.
“However the Chancellor has decided to increase National Insurance contributions on self-employed people by one per cent next year and a further one per cent in 2019, to bring them closer in line with those taxed by their employers under PAYE. Based on our estimations, only the self-employed earning more than £22,724 a year from April 2018 will see an increase in their N.I. contributions.
“Whilst the government had previously announced that the corporation tax rate would fall to 17% by 2020, today the Chancellor announced that the dividend tax allowance would reduce from £5,000 to £2,000 in April 2018. This will affect investors and director-shareholders.
“Independent retailers and other small businesses hit hardest by business rate increases this year, will welcome the £50 a month cap and most local pubs will benefit from the £1,000 discount announced by the Chancellor.
“But the promised comprehensive reform of the outdated rating system is again delayed for yet more consultation. Many local businesses, particularly on the high street, are competing with a growing number of online-only product and service suppliers and have long been calling for a more level playing field.
“This was the last Spring Budget –the annual Budget will now be in the Autumn - and it would have been a good opportunity to seed the green shoots of growth for small businesses and start-ups.
“Instead, it is a case of much more give than take for local business owners this year as they tackle a multitude of challenges including digital tax reporting, compulsory contributions to staff pension pots and the National Living Wage.”