Chancellor of the Exchequer Philip Hammond announced his Spring Budget to Parliament on Wednesday 8 March, the wider implications of which are sure to affect SMEs across the UK. But will those changes be beneficial or detrimental to conditions for the UK’s owner-managed businesses?
The UK200Group is the UK’s leading membership association of chartered accountancy and law firms, whose members act as trusted business advisers to over 150,000 SMEs.
John Painter, Managing Partner at CB Chartered Accountants and Chair of the UK200Group’s Property and Construction Group, said, “I am pleased to hear of the £435million fund to help small businesses and I hope that the local authorities use their share for discretionary relief wisely to help the small businesses in the town and city centres that are being badly affected by the changes.
“My fear is that it will be used to attract investment in out of town sites rather than maintain the level playing field.”
Alan Boby, Tax Partner at UK200Group member firm Ellacotts LLP and member of the UK200Group’s Tax Panel, said, “The Chancellor’s Budget announcements only made the choice of business structure more difficult. Despite the fact that he said he wants to support entrepreneurs, he has increased the national insurance costs for the self-employed and increased dividend taxes for those who own a company. The factors affecting whether to be self-employed or to set up a company have now become even more complicated.
“Although these tax changes are not due to come in until April 2018, SMEs want to plan ahead and need certainty for the future. It is now important than ever for SMEs to seek specialist tax advice when deciding which business vehicle to use.”
Lorna Sizer, Senior Manager of Personal Tax at UK200Group member Knill James, said, “The increase in the National Insurance contributions for the self-employed announced yesterday is not a great surprise, given the 3% differential between the rate of contributions paid by employees and the self-employed.
The Chancellor has softened the blow, by delaying the first 1% increase until April 2018 when the Class 2 contributions paid by the self-employed will be abolished, as a result the additional cost in the first year will be under £200 followed by a further increase of up to £350 the following year.
“Philip Hammond’s attack on the self-employed seems to overlook the loss of employment rights that the individuals have to accept and the additional risks taken by them as part of running their own business, neither of which affect employees.”
