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Small Business Guide to Budget 2018

Last week the Chancellor of the Exchequer, Philip Hammond, shared with us his 2018 Autumn Budget, thanking the British public for their hard work and making a number of announcements for small to medium business owners here in the UK.  Today, we’re going to take a more detailed look at what small to medium business owners can expect from the latest Budget.

The good news is that the Chancellor announced that he will be cutting business rates for the smallest of small businesses.  Businesses with a rateable value of £51,000 or less will see their business rates bills reduced by a third over the coming two years, resulting in up to £8,000 worth of savings for some businesses.  It’s estimated that 90% of small retail businesses, such as independent shops, cafes and pubs will benefit from this.

The personal tax allowance will be increased to £12,500 for basic rate tax payers and £50,000 for higher rate tax payers in 2019.  The National Living Wage will increase from April 2019 from £7.83 an hour to £8.21, benefiting around 2.4 million workers in the UK. 

When it comes to Green or Environmental tax, only one was announced in the Chancellor’s Budget speech – companies that manufacture plastic products with less than 30% recycled materials will face a levy.  Hammond also revealed that he had considered a tax on plastic cups, but decided that it would not lead to a substantial reduction in their use.  He did promise to continue monitoring progress and may introduce another tax if no improvement is seen.

We’ve seen a lot in the news in recent weeks about the planned Digital Services tax and this has caused concern for so many online retailers, both here in the UK and overseas.  The good news is that small businesses selling online need not worry – the tax announced by the Chancellor will only apply to businesses that generate millions in global sales.  Whether this tax will have an impact on smaller businesses that sell products through large online retail sites like Amazon and eBay remains to be seen.

The Future High Streets Fund should settle the worries of small to medium businesses that trade on High Streets in towns and cities across the UK.  Hammond announced £675 million worth of co-funding for local authorities to use in planning the future of their High Streets.  One suggestion he made was that some of this funding could be used to convert commercial premises to residential use, a move that we’ve already seen creeping into cities and towns as part of the regeneration process.  The Chancellor revealed that it will take time to adapt to these changes but it’s vital to do so as the increase we’ve seen in online shopping in recent years is irreversible.

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