The FSB has welcomed many of the measures announced in what it has termed a ‘business-friendly budget’, including:
No lowering of the VAT threshold for small businesses: it will remain at £85,000 for two years
“It was good to see the Chancellor’s speech acknowledge our concerns about the VAT threshold,” said Mike Cherry, Chairman of the Federation of Small Businesses (FSB) National Chairman. “Dragging thousands of more small firms into the hugely complex VAT regime would have caused a significant drag on output at an already challenging time for businesses.”
Digital economy royalties relating to UK sales which are paid to a low-tax jurisdiction will be subject to income tax – part of a tax avoidance clampdown.
Mike Cherry: “The promise to tackle VAT evasion by online overseas sellers is welcome. No business should be gaining an unfair advantage by evading tax.”
A U-turn on the controversial ‘staircase tax’: Affected businesses will be able to ask the Valuation Office Agency (VOA) to recalculate valuations so that bills are based on previous practice backdated to April 2010 – including those who lost Small Business Rate Relief as a result of the Court judgement.
“The end of the staircase tax will throw a lifeline to thousands of small firms that had no time to prepare for this completely unfair and retrospective levy,” says Mike Cherry. “We hope the end of the staircase tax marks the first step towards wholesale reform of the regressive business rates system.”
Business rates: bringing forward the planned switch in indexation from RPI to the main measure of inflation (currently CPI) to 1 April 2018 increasing the frequency with which the VOA revalues non-domestic properties by moving to revaluations every three years following the next revaluation, currently due in 2022.
The FSB has campaigned for CPI-indexation of business rates bill increases and feared small businesses that would have been hardest hit by an RPI-linked increase. Mike Cherry also welcomed the move to three-yearly revaluations, but warned: “However, the delivery of this pledge must be carefully thought-through.
It can’t be allowed to inadvertently place additional burdens on small firms or require them to hire a surveyor just to get their bill right.”
Expecting local authorities to bring forward 20% of their housing supply as small sites.
Mike Cherry welcomed the Chancellor’s acknowledgment of the “vital role” small housebuilders can play in solving the housing crisis. “The £1.5 billion extension to the Home Building Fund marks a promising starting point for making that solution a reality.
The promise to invest £630 million to help more building on small sites, along with greater attention on upskilling UK construction workers, is also much needed. Small housebuilders need better access to finance and better access to land.”
Having reformed the off-payroll working rules (IR35) for engagements in the public sector in April 2017, the government reports that public sector compliance is increasing as a result, and promised to consider extending the reforms to the private sector to ensure individuals who effectively work as employees are taxed as employees – even if they choose to structure their work through a company.
Mike Cherry praised the Government’s “sensible approach to IR35,” and said the FSB looks forward to consulting with them on the issue, “ensuring the rights of the genuinely self-employed are protected. “
Access to finance.
Mr Cherry emphasised how important it was that the UK remains attractive to small businesses with Brexit looming. “Today’s announcement of an additional £2.5 billion for the British Business Bank to continue their vital work in facilitating access to finance for small firms will help make that happen.”
Increase in the Enterprise Investment Scheme (EIS) allowance and investment in workforce training.
“This will encourage more investment in the fast-growing businesses that drive productivity growth,” said the FSB Chairman. “Moves to eradicate misuse of the scheme for capital preservation are also welcome as long as they don’t affect genuine investments in small, rapidly growing businesses.”
“It’s encouraging to see the Government making a meaningful investment in upskilling our workforce. Particularly welcome is the announcement of £30 million for digital skills and long-distance learning.”
An increase in the Minimum and National Living Wages that takes into account the current state of the economy.
Mike Cherry: “FSB has always supported the need for minimum wage increases that our economy can afford. It’s good to see the Government showing flexibility in its approach to increasing the National Living Wage, while respecting recommendations from the Low Pay Commission and the advice from FSB.”
The Chairman also praised the extension of the national productivity investment fund and said the Transforming Cities Fund would accelerate delivery of the Northern Powerhouse and Midlands Engine initiatives, providing a huge boost to local small businesses.