Yesterday, the much-awaited Autumn Budget was released and big changes are set to come into play over the next couple of years.
Chancellor Philip Hammond threw out some interesting announcements that will affect businesses up and down the country. So, we’ve put together a list of some of the most important ones.
Possibly one of the biggest announcements made in this Budget for businesses. The much-criticised government initiative that has been active in the public sector for the past couple of years is now going to be brought into the private sector.
This will be delayed until April 2020 and will then only apply to medium to large sized businesses. Contractors working with smaller firms may breathe a sigh of relief for now.
Annual Investment Allowance
The Annual Investment Allowance (AIA) will be rising to £1 million for two years. This is a huge increase from the original £200,000 figure – something that the British Chambers of Commerce has been asking of the government for a while.
This new allowance will be available from 1 January 2019 to 31 December 2020. Hammond said that this is part of the government’s plan to “stimulate business investment”.
Digital Services Tax (DST)
The government has been under increasing pressure to target large, digital businesses that may be involved in tax evasion or avoidance.
From April 2020, a 2% tax will apply to certain digital businesses to ensure the amount of tax they pay is reflective of the value they derive from UK users.
For those concerned about this digital tax, the Chancellor made clear that this is not an online sales tax and will not apply to the growing number of tech start-ups that rely on the internet to conduct their business.
This new tax will only apply to established tech giants that make over £500 million a year in global revenue. By April 2020, this is expected to raise £400 million a year for the Treasury.
Britain is still working towards a global agreement that can solve the problem of multi-national companies avoiding tax. The Chancellor said that Britain will consider a global agreement if/when one is made, but until then, the digital services tax will act in its place.
However, Labour leader Jeremy Corbyn described this new tax as “too little, too late”.
Good news for those looking to hire apprentices. The 10% fee that small businesses must pay in order to hire apprentices will be halved.
The Chancellor told the Commons that SMEs will only need to contribute 5% to the training of apprentices as part of a “£695 million package to support apprenticeships”. This change will come into effect in April 2019.
Investment in tech and science
The Budget has allocated £1.6 billion to build on the UK’s work in science and innovation. To support businesses in adopting cutting-edge technology, a £115 million fund is set to extend funding for the existing Digital Catapult scheme.
A £50 million fund has also been set aside for the new Turing AI Fellowships which aim to bring the best global researchers in AI to the UK.
Finally, we’ll end with something likely to affect most people on your payroll – the personal allowance is going up. The amount of money people can earn before they have to pay tax is increasing from £11,850 to £12,500 in April 2019 – a plan brought forward a year earlier than expected.
As well as this, the figure at which people begin to pay the higher rate of 40% is also going to be raised from £46,350 to £50,000.
What do you think of the Budget? Which proposal are you most pleased with? Was there anything you wanted to see that was missed out? Please share your thoughts below.
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About The Author
An experienced business and finance writer, sometimes moonlighting as a fiction writer and blogger.