Budget 2018 – Pro-business…but No-Deal Brexit casts a shadow
The 2018 Budget has been received positively by business groups. Carolyn Fairburn, CBI Director-General said it was “a rock solid Budget, bringing more treats than tricks for business whilst the Federation of Small Businesses hailed it as “the most small-business-friendly budget that this Chancellor has delivered.”
So what could the Budget mean for your business? Here we break down the Chancellor’s key statements.
Entrepreneur’s Relief (“ER”)
- Despite speculation prior to the Budget, no change has been made to the level of ER available, however:
- as of 29 October 2018, shares held by a shareholder wishing to claim ER must entitle the shareholder to at least 5% of the distributable profits, and 5% of the net assets, of the relevant company; and
- from 6 April 2019 the period of ownership required to claim ER on a disposal will double from one year to two years.
Annual Investment Allowance (“AIA”)
- The AIA which provides 100% tax relief on assets qualifying as plant and machinery is to be increased from £200,000 to £1 million for two years.
Business Rates Cut
- Business rates for firms with a rateable value of £51,000 or less will be cut by one third over two years – the measure will benefit 90% of independent shops, pubs and restaurants cutting rates by £8,000 on average.
- Larger businesses will however “continue to suffer needlessly until there is a full, in-depth review” according to the CBI.
- The treasury has listened to appeals from the business community and reduced the Apprenticeship Levy from 10% to 5%.
The High Street
- Coupled with the business rates cut, a £675 million Future High Streets Fund has been launched to invest in improvements to town centre infrastructure, reduce congestion, support redevelopment around high streets and enable housing and new workspaces to be created.
- However, with high street giants like Debenhams and House of Fraser in turmoil and restaurants closing across our region, will this fund simply be a drop in the ocean as consumers move online?
Regions & Devolution
- The Chancellor announced a £770 million increase to the existing £1.7 billion Transforming Cities Fund but half the fund remains ring-fenced for city regions with devolution deals already in place.
- As the government continues to ignore calls for a “One Yorkshire” devolution deal for our region – despite the move being backed by 18 of the region’s 20 councils – there’s a risk Yorkshire may miss out on greater devolved powers and investment while rival Manchester thrives.
Overall, Philip Hammond announced changes in tax, expenditure and public policy and promised that “austerity is coming to an end.” Yet, as Brexit remains the elephant in the Chancellor’s drawing room; the Chancellor has admitted that a ‘no-deal’ Brexit would mean a new emergency Budget next Spring, with many of his Budget pledges being ripped up and a return to austerity likely.