October Budget - A Summary for Businesses
You probably noticed that the chancellor, Philip Hammond, announced the budget yesterday (29th October 2018). We take a look at what this means for businesses, and what you need to be aware of.
As this is the last budget before Brexit, it was seen as a key event to see how things are looking, and how they may look for the future.
VAT Threshold
Firstly, the VAT threshold remains unchanged at £85,000, and the chancellor has pledged to keep this at this level until at least 2020.
What does this mean?
There are 2 things to take away from this. Firstly, businesses with a low turnover don't have to worry about hitting the threshold as it hasn't been lowered (which may have been done to increase the amount of tax collected).
However, if inflation continues to rise, and in turn the cost of everything else (supplies, utilities, materials, and so on), then a business may hit this threshold before they realise.
Tax-free Personal Allowance
It was pledged that the tax-free personal allowance will increase to £12,500 a year earlier than originally planned (end of the 2019/20 tax year).
What does this mean?
This is a positive move as an individual will be able to earn upto £12,500 tax free rather than the previous £11,850, giving some a bit of breathing space.
If you're an employer, this could seem like a small win too. If an employee is earning, for example, £12,250, this would have previously been above the threshold and therefore they would be taxed. This now falls under the threshold giving them a bit more money in their pocket.
The High Street
One of the areas that have suffered since the recession began is the high street. The chancellor has pledged £675m cash to help improve transport and the high street itself, in terms of re-developing unused shops into homes and offices.
What does this mean?
This is part of a wider £1.5bn investment into the high street, and as this is an area that's suffered for some time, any investment will be good news. With improved transport links, shop owners should hopefully see an increase in footfall and income as a result. However, this will take time.
Business Rates Reform
A burden for many businesses, and often an area that's criticised for being unfair and a bit of an "archaic" system. The Treasury claims that almost half a million high street businesses will see business rates cut by up to a third through £900m of business rates relief.
This is aimed at helping the local businesses compete against the ecommerce and shifting shopping patterns which is driving people away from the town centres.
What does this mean?
As with the high street fund, any discount or reduction is always seen as a good thing. As business rates have always been a bit of a struggle for some of the smaller businesses, this can be seen as encouraging, and hopefully a step in the right direction for the high street too.
Is this a good budget?
As with most things, time will tell. But some have argued that it's a bit of a false budget at the moment as no one really knows the effect Brexit will have on the UK.
Until March 29th, when the UK leaves the EU, things will be a bit of an unknown, and could very well change by the time the next budget comes around.
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