The chancellor Phillip Hammond delivered his third budget yesterday. The budget was painted as the end of austerity by the Conservatives in the run up to its release. In truth, it is more a case of a few giveaways to the public sector in advance of a possible general election. Of course, everything could change in light of Brexit (whatever form that may take). Our overall assessment for businesses is that there isn’t much to get excited about……..again!
The key points affecting those who are self-employed or running a small business are:
- The personal allowance will increase from £11,850 to £12,500 – a year earlier than planned.
- The level at which the tax rate moves from 20% to 40% will increase from £46,350 to £50,000.
- The national living wage rate increases from £7.83 per hour to £8.21 per hour.
- The annual investment allowance for businesses increases from £200,000 to £1 million, helping businesses with reinvestment and expansion plans to achieve tax savings earlier
- Business rates to be cut for properties with rateable values under £51,000 with further small business rate reliefs available
All of the above are good news for most small businesses although some might argue that increases to the minimum wage coupled with cost increases attaching to things such as auto enrolment for pension tends to dilute the main benefits in this budget.
There really is much tax planning to be done around the main points in this budget. There may be some opportunities to save tax for small companies in terms of the timing and nature of remuneration for directors (i.e. the mix and timing of salary and dividends).
But all in all, our advice is simple…………….keep running your small business to maximise your profit, improve your cash-flow and talk to your accountant/advisor regularly to see what can be done to help keep some more money in your pocket!