How the Budget could impact SMEs
Many SMEs have responded positively to the Autumn Budget, with the Federation of Small Businesses (FSB) praising Chancellor Philip Hammond for "listening to the small business community". The Telegraph’s Business Tracker also revealed a turnaround in sentiment, with many more businesses reporting a positive outlook after the Budget. But what exactly can small businesses expect to change?
Reassuring stability
Much of the positivity comes not from change, but from much-needed stability. The VAT threshold is being held at £85,000 until 2022 and fuel duty has been frozen too. What’s more, the predicted rollout of IR35 rules in the private sector will not apply to small businesses. The rules, designed to prevent ‘personal service companies’ being used to dodge taxes, will apply from 2020.
Fears over the potential scrapping of Entrepreneurs’ Relief also proved unfounded. Instead the Chancellor has addressed perceived misuse of the policy by changing the qualifying period. Now entrepreneurs must own their business for at least two years (rather than the previous one) to access the reduced capital gains tax rate when they sell their company.
Reducing burdens
The Budget also introduced more active policies. Recognising the struggles faced by High Street retailers across the UK, Mr. Hammond has cut business rates by a third for shops with rateable value of £51,000 or less, a measure that applies for two years. This is backed up by the introduction of a £675m ‘Future High Streets Fund’ to help councils rejuvenate High Streets.
The Budget also aims to reduce the cost of apprenticeships for small businesses. Going forward, SMEs contribution toward training costs will be reduced from 10% to 5% in an effort to improve their access to new talent.
Changing long-term
Other measures outlined in the Chancellor's Autumn Budget may not have a notable impact for some time. For instance, up to £1bn has been pledged to guarantee loans to SME house builders. From 2020, loss-making SMEs will see their R&D tax credits capped at three times total pay-as-you-earn (PAYE).
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