On 25 November, the Chancellor delivered his latest Autumn Statement. In a year which has already seen two Budgets, which have both brought big changes to the small business community – including the big dividend income shake-up and the introduction of the new National Living Wage – small businesses were perhaps understandably tentative about what this year’s Autumn Statement might bring.
In this article we summarise the key points arising from the Autumn Statement and focus specifically on what the changes may mean for small businesses.
In summary (general):
- Tax credit cuts scrapped all together
- £12bn in targeted welfare savings to be delivered in full
- Small business rate relief to be extended for one more year
- NHS to receive £10bn more funding a year in real terms by 2020
- Basic state pension will rise by £3.35 to £119.30 a week
- New 3% surcharge on stamp duty for buy-to-let properties and second homes from April 2016
- Doubling of housing budget to £2bn a year
- Capital funding of transport projects to rise by 50%
- Increased devolution with 26 new or expanded Enterprise Zones announced
- Transport (37%), environment (15%) and energy (22%) departments all face funding cuts
In summary (small business specific):
- Extension of small business rate relief scheme for another year
- Small businesses to be ‘exempt’ from apprenticeships levy
- Small businesses to have digital tax accounts by the end of the decade
- Greater focus on the Northern Powerhouse and Enterprise Zones
- No change in Entrepreneurs’ Relief
Autumn Statement small business impact
Overall – good news for small businesses?
Scott Sanderson, Partner at Hawsons, commented: “On first look the 2015 Autumn Statement had very little to shout about for small businesses; however, looking more closely, there is scope for optimism following some of the announcements. Overall this was not a bad Autumn Statement for entrepreneurs and small businesses. Welcome announcements include the extension of the small business rate relief, a levy exemption on apprenticeships, a commitment to the Northern Powerhouse, the expansion of Enterprise Zones and start-up loans.”
“Of those, in particular, extending the small business rate relief scheme for another year (until April 2017) is one announcement that will be welcomed by the small business community.” The Chancellor said that this measure is likely to impact 600,000 small and micro businesses.
George Osborne revealed in his summer Budget that businesses in the UK will start to contribute, from April 2017, towards funding 3m apprentices by 2020. The details of this were initially vague, but the Chancellor has now confirmed that all businesses will get a £15,000 allowance to offset the levy, meaning that 98% of all employers will pay no apprenticeship levy at all.
Scott said: “It is vitally important that the government supports the creation of new skills. The skills gap in the UK is an ongoing issue, particularly in manufacturing, engineering and retail, so apprenticeships are of course a key focus. With the new National Living Wage and the onset of auto enrolment costs, this potential additional cost would have crippled many small businesses. Although larger businesses will not be happy, this is good news for the small business community.”
Scott added: “The government’s continued commitment to Enterprise Zones and the Northern Powerhouse also brings good news for small businesses. Enterprise Zones give start-ups and small businesses much needed support and tax-saving opportunities, so this is really encouraging. Linking with the Chancellor’s aspirations of a Northern Powerhouse, more than a third of all the new zones will be in the North of England.”
“In fact, George Osborne revealed that the North has grown faster than the South so far this year. Although it should be mentioned that this may be slightly misleading due to the substantial regression the North faced on the backdrop of the recession, it shows signs of long-term growth across the whole of the UK.”
“The substantial improvements in the UK’s transport infrastructure – including a 50% increase in capital funding for transportation projects and a £400m Northern Powerhouse fund – will also likely bring inward investment and business opportunities to small businesses.”
For more information
Over the coming weeks we will have ongoing analysis of the impact this year’s Autumn Statement will have on the UK’s small business community. To keep up-to-date with that news, as well as all other developments in the sector, please sign-up for our specialist small business newsletter.