Autumn Budget 2017 and it’s effect on SMEs
It feels like it’s impossible to talk about anything at the moment without Brexit casting its shadow and the budget this year is no exception. With talks at December’s EU Summit, which could set us on the path to a “no deal” it’s a very uncertain time for trade coming in and out of the UK.
Contrary to his pessimistic public image however it appears that the Chancellor is taking a rather bold approach, stating his intention to use the autumn budget as a means to “embrace change, meet our challenges head on and seize the opportunities for Britain”.
Additionally, Mr Hammond also stated that the Conservative government supports small business and “seeks a deep and special relationship with our European neighbours” so let’s see what they actually means in terms of the coming year’s fiscal policy.
Autumn Budget 2017
The state of the economy
Growth forecast for 2017 reduced from two per cent to 1.5 per cent.
GDP reduced to 1.4 per cent, 1.3 per cent and 1.5 per cent in subsequent years before rising to 1.6 per cent in 2021-22.
Productivity growth and business investment also revised down.
Annual rate of CPI inflation forecast to fall from peak of three per cent to two per cent later this year.
Another 600,000 people forecast to be in work by 2022.
£3 billion to be set aside over next two years to prepare UK for every possible outcome as it leaves EU.
Annual borrowing £49.9 billion this year, £8.4 billion lower than forecast in March.
Borrowing forecast to fall in every subsequent year from £39.5 billion in 2018-19 to £25.6 billion in 2022-23.
Public sector net borrowing forecast to fall from 3.8 per cent of GDP last year to 2.4 per cent this year, then 1.9 per cent, 1.6 per cent, 1.5 per cent and 1.3 per cent in subsequent years, reaching 1.1 per cent in 2022-23.
Debt will peak at 86.5 per cent of GDP this year, then fall to 86.4 per cent next year; then 86.1 per cent, 83.1 per cent and 79.3 per cent in subsequent years, reaching 79.1 per cent in 2022-23.
£500 million for 5G mobile networks, fibre broadband and AI.
£540 million to support the growth of electric cars, including more charging points.
A further £2.3 billion allocated for investment in research and development.
Income tax to be applied from April 2019 on digital economy royalties relating to UK sales which are paid to a low-tax jurisdiction, raising about £200 million a year.
Tax-free personal allowance to rise to £11,850 in April 2018.
Higher-rate tax threshold to increase to £46,350.
Short-haul air passenger duty rates and long-haul economy rates to be frozen, paid for by an increase on premium-class tickets and on private jets.
£320 million to be invested in former Redcar steelworks site.
Second devolution deal for the West Midlands.
£1.7 billion transport fund for city regions.
£2 billion for Scottish government, £1.2 billion for Welsh government and £650 million for Northern Ireland executive.
Scottish police and fire services to get refunds on VAT from April 2018.
Pensions, savings and welfare
£1.5 billion package to ‘address concerns’ about the delivery of universal credit.
Seven-day initial waiting period for processing of claims to be scrapped.
Claimants to get one month’s payment within five days of applying.
Rises to the National Living Wage from April are confirmed. It will rise 4.4 per cent, from £7.50 an hour to £7.83 – giving full-time workers a further £600 pay increase.
Repayment period for advances to increase from six to 12 months.
New universal credit claimants in receipt of housing benefit to continue to receive.
Alcohol, tobacco, gambling and fuel
Vehicle excise duty for diesel cars that do not meet latest standards to rise in April 2018.
Duty on beer, wine, spirits and most ciders will be frozen.
But duty on high-strength “white ciders” to be increased via new legislation.
Tax hike will not apply to van owners.
Existing diesel supplement in company car tax to rise by one per cent.
Proceeds to fund a new £220 million clean air fund.
Tobacco will rise by two per cent above Retail Price Index (RPI) inflation while the minimum excise duty on cigarettes introduced in March will also rise, as will duty on hand-rolled tobacco.