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Budget Changes Welcomed by Small Businesses; Critics Say More Could Be Done

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Chancellor Philip Hammond's latest Budget features a package of support for the high street, although some industry experts have stated that the lack of business rate reform means that it does not go far enough.

Key takeaways from the Budget which are applicable to small businesses, include:

  • A 2% digital services tax, from April 202, on the UK revenue of large technology companies - profitable companies with global sales of more than £500m will be liable
  • Annual investment allowance to be increased from £200,000 to £1m for two years
  • Contribution of small companies to apprenticeship levy to be reduced from 10% to 5%
  • Business rates bill for firms with a rateable value of £51,000 or less to be cut by third over two years
  • Measure to benefit 90% of independent shops, pubs and restaurants, cutting bills by £8,000
  • £900m in business rates relief for small businesses and £650m to rejuvenate High Streets - will apply to nearly 500,000 small businesses, cutting around a third off their bills
  • New 100% mandatory business rates relief for all lavatories made available for public use
  • Extending changes to the way self-employment status is taxed, from the public sector to medium and large private companies, from 2020

The £650m referenced in the Budget is to be spent on transport and infrastructure improvements, building restorations, and potentially alter planning rules to allow shops to be converted into homes and offices.

Federation of Small Businesses national chairman Mike Cherry said: “In the lead up to the budget, we’ve been urging the government to provide targeted support to struggling small firms on our high streets.

“This announcement shows the Chancellor has listened and this relief is a welcome step in getting the urgent help that all small businesses need. This fund will help keep high streets at the heart of our communities.

"Small businesses on our high streets that cannot get Small Business Rate Relief will be delighted with the significant discount for the next 2 years, which on average will help these businesses to the tune of almost £2,000 each, but potentially up to around £16,000 off small businesses facing the biggest bills. 

Commenting initially, Helen Dickinson OBE, Chief Executive of the BRC, said:

“The Government has missed a much-needed opportunity to help the retail industry. While we welcome measures to assist smaller retailers, the majority of the UK's 3.1 million retail workers are employed in businesses that will not benefit from today’s business rates announcement. If the Government is to truly back business, it must engage in more extensive business rates reform to help all retailers and their employees through this period of transformation.”

- On business rates relief for small businesses:

“While we welcome the temporary support being given to small businesses, these measures alone are not sufficient to enable a successful reinvention of our high streets.

"Retailers are currently in the midst of a perfect storm of factors – technology changing how people shop, rising public policy costs and softening demand.

“Rather than tinkering around the edges, struggling high streets require wholesale reform of business rates in order to thrive. The issue remains that the business rates burden is simply too high.”

- On the Future High Streets Fund and relaxation of planning laws:

"Retailers welcome the measures announced by the Treasury to invest new funding to boost high streets and town centres and facilitate re-invention to modern and diverse destinations. We await with interest further details of the plans, particularly around how the funding will be targeted, who will eligible and how quickly funds will be made available.”

Business Growth Expert and Yomdel CEO, Andy Soloman commented:

“This budget levels the playing field between the tech giants and the little guy, and I for one raise a glass to Mr Hammond for listening to the UK’s small businesses and delivering this big boost when they needed it most.  

It will no doubt come as a kick below the belt for Bezos and Zuckerberg who have had it too good for too long at the expense of the smaller British retailer, who have been relying on seasonal boosts in sales just to keep their heads above water.

Technology plays such a huge part in our day-to-day lives, but it’s important that as it becomes more prevalent we don’t allow it to do so at the expense of British business.” 

Source : Insight DIY Team

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30 October 2018

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