The Chancellor of the Exchequer Chancellor Philip Hammond gave his first (and last!) Autumn Statement yesterday to a standing-room-only House of Commons. It was also the first statement since the Brexit referendum result back in June.
In a statement that contained relatively few surprises, here are the headlines of the main policies that will have the most impact on SMEs:
National Living Wage increase
From April 2017, the National Living Wage will increase from £7.20 to £7.50; according to the government, this will be a pay rise of over £500pa for full time workers. The money will undoubtedly assist those on the lowest wages, but the increase was actually smaller than many expected. If the government is to meet its target of £9 an hour by 2020, a 50p a year increase for the next five years may be a tall order for some SMEs to meet.
The “National Living Wage” is different from the “Living Wage”; if you’re not sure of the difference, read our blog post here.
Hammond announced increased efforts to reduce the amount of profits diverted from the country, meaning large corporations such as Amazon paying very little tax in the UK. Whilst this measure is not exactly aimed at small businesses, it will hopefully make the system fairer for them.
Rural Rate Relief is to be increased to 100%, giving SMEs a tax break worth up to £2,900.
Businesses are also likely to see their insurance bills rising, with an increase in insurance premium tax from 10% to 12%.
Although there was no changes made to the corporation tax rate, the Chancellor he reconfirmed his commitment to reducing it to 17% by 2020.
Funds for Export Finance
The chancellor announced plans to double the UK Export Finance capacity in order to make it easier for British companies to export. The government’s current target is for £1tn in exports by 2020.
Reduction of employee benefits
Hammond announced plans to remove “unfair” tax advantages which some people benefit from via salary sacrifice schemes. From April 2017, most schemes will be subject to the same taxes as taxable income.
£1bn broadband investment
The Chancellor wants the UK to be a “world leader” in 5G, implementing a full-fibre network and improvements in speed, security and reliability. The government will be investing in excess of £1bn into the UK’s digital infrastructure. It will also provide 100% business rates relief for on new fibre infrastructure.