How Will the Budget 2018 Affect North West Businesses?
In a speech lasting 72 minutes, Chancellor Philip Hammons delivered his third budget as chancellor. The analysis is now in and we can reveal how the budget affects businesses across the North West. And it seems that there will be changes that affect many of our clients.
The Main Points
The personal allowance threshold is the rate at which people start paying income tax. The threshold for lower taxpayers at 20% will rise from £11,850 to £12,500 in April. Higher taxpayers – at 40% will see their personal income threshold rise from £46,350 to £50,000, again as of next April.
This tax cut came a year early and will continue to rise in line with inflation after these latest rises in April 2019.
The National Living Wage also increases by 4.9% to £8.21, from £7.83 an hour. The rate will change in April – find the current national living wage rates.
You may have heard that as part of the budget speech, the chancellor said that the era of austerity is “finally coming to end”. The poor spring weather was blamed for the reduction in the 2018 growth forecast from 1.5% to 1.3%.
However, the forecast has been raised to 1.6% in 2019, with annual forecasts of 1.4% in 2020, 1.4% in 2021, 1.5% in 2022 and 1.6% in 2023.
Wages growth was at its highest for nearly a decade with 3.3 million more people being employed than in 2010. There are 800,000 more jobs forecast by 2022.
There were several announcements relating to business which may affect some of our clients. Some of the most pertinent include;
* Extending changes to the way that self-employment is taxed. These changes will impact from 2020 including public sector to medium and large private companies.
* The high street is changing which is possibly why the £900m in small business rates relief and an extra £650m to rejuvenate the high street were made.
* There are changes to business rates too with firms with a rateable value of £51,000 or less will be cut by a third over two years. this measure will see independent shops, pubs and restaurant with £8,000 less to find in business rates over the coming years.
It was also announced that there would be no more PFI contracts in the future. Current PFI deals would be managed ‘new centre of excellence’ and done so “in the taxpayer’s interest”.
Large digital services companies also face changes with a 2% tax on UK revenues. Big technology companies will be affected from April 2020, with companies of global sales of £500m or more facing the new UK Digital Services Tax.
Small business friendly or not?
There is much more detail to the 2018 Autumn Budget but looking at the analysis and commentary from business leaders, many believe that this budget is the most small-business-friendly for some years.
Fuel duty will be frozen for the ninth year and the VAT threshold kept at £85,000, two moves that the small business community has praised.
All businesses understand that consumer behaviour is changing, no more so than the small business. The Federation of Small Business’ chairman Mike Cherry commented on the friendly nature of the budget but also how the chancellor has listened to the requests of the small business community.
How will the budget affect you?
But like budgets past and those to come in the future, there will be winners and losers. Find out how the 2018 budget affects you personally with this handy tool from BBC Business.
For businesses in the North West, the budget was hailed by many as ‘big, with some eye-catching measures’. Like other cities and towns, North West businesses are struggling but whilst some measures were seen as ‘helpful’, others were seen as a sticking plaster.
You can be assured that the team at Cortex Accounting will continue to make the best financial moves for your business.