The 120+ page 2018 Budget was delivered by Chancellor of the Exchequer, Phillip Hammond, on October 29th. As usual, it has had quite an impact on SMEs and the self-employed. If you consider how many SMEs are in the UK, millions of companies are affected throughout the private sector and UK economy overall. Here, we’ll look at how the recent budget changes have impacted SMEs.
Benefits For High-Street Businesses
It’s no secret that high-street stores have declined and been suffering significantly in recent years. Some of the UK’s major brands have even fallen victim to the rise in online shopping, leading to store closures and a huge loss of jobs. So, to help combat the problem, in this year’s budget, Hammond provided relief to high street businesses in the form of business relief.
Businesses which have a property with a value of less than £51,000, will now see their rates cut by up to a third. This could mean businesses could save £8.000 a year. It has enabled struggling high-street businesses to continue trading and avoid going into the red.
VAT Threshold Frozen
Initially there were worries that the VAT threshold would be slashed, potentially impacting thousands of UK businesses. However, instead the chancellor chose to freeze the threshold at £85,000, providing welcome news to small businesses across the country. If it hadn’t been frozen, the implications would have also affected the Making Tax Digital which is due to come into play in April 2019.
Small businesses which manufacture plastic products which is less than 30% recyclable have been negatively hit by green taxes. In a bid to tackle the plastic epidemic, particularly in the world’s oceans, the government has decided to tax the businesses which don’t produce recyclable materials. This is now leading affected businesses to look into alternative manufacturing practices to increase the amount of recyclable plastic used.
Access To Financial Ombudsman
Up until the budget, only individuals were able to gain access to the financial ombudsman. However, now SMEs are going to have access too. This means small businesses can now gain the help they need to resolve financial disputes. As more small businesses rely upon short term credit from companies such as Liberis, having a level of protection there in case something goes wrong is extremely valuable.
Digital Services Tax Relief
Furthermore, the latest budget revealed that small businesses would not have to worry about the new digital services tax. This tax will only apply to online retailers that earn millions in revenue. While online small businesses were worried about this possible tax, they can continue to grow their retail ecommerce businesses. Then, once you have reached a level of scale, the obligation to pay higher taxes would naturally step in.
Overall, the 2018 Budget has been the most positive budget for small businesses in years. There are many benefits that will assist high street stores from falling behind on payments. Additionally, freezing the VAT threshold gives many UK small businesses more breathing room. On the other hand, small businesses that are not operating with an environmentally friendly approach could face higher charges. Still, those companies will have increased access to lodge their complaints and make their SME voice heard. Considering the digital tax announcement, the majority of the changes announced have impacted businesses in a positive way and the above are just some of them.