“A much-needed lifeline for small firms”
Following the Chancellor’s Autumn Budget statement, OT spoke to the Federation of Small Businesses’ national chairman, Mike Cherry (pictured), for his view of its impact for the High Street and on optometrists’ wallets
31 October 2018
What is your initial take on the Budget?
The Chancellor has shown that he is now listening to the small business community. By acting on recommendations for High Streets, Value Added Tax (VAT) and the Employment Allowance, the Treasury is set to provide some much-needed lifelines for thousands of small firms.
How have businesses fared from the Budget?
Small businesses on our High Streets that cannot get Small Business Rate Relief will be delighted with the significant discount for the next two years, which on average will help these businesses to the tune of almost £2000 each, and potentially up to around £16,000 off for small businesses facing the biggest bills.
Complying with the burdensome VAT regime costs the average small registered business a working week every year. That’s time that should be spent growing their firms. Suddenly dragging more small firms into the burdensome VAT system would have risked a real shock to the economy at an uncertain time. The Chancellor’s decision to freeze the £85,000 turnover threshold for VAT registration until 2022 has saved the business community from disaster.
The Employment Allowance is a vital incentive that’s helped more than a million small firms create jobs, increase pay and invest over the last year alone. It’s good to see the Government keeping the allowance in place, directing it towards the small employers where it has the most impact.
The Chancellor has shown that he is now listening to the small business community. By acting on recommendations for High Streets, Value Added Tax (VAT) and the Employment Allowance, the Treasury is set to provide some much-needed lifelines for thousands of small firms
What do the changes to the apprenticeship levy mean for employers?
Apprenticeship starts have plummeted over the last year following the introduction of burdensome co-investment costs for small firms who want to bring young people into the workplace. Dropping the proportion of apprenticeship training costs footed by small firms from 10% to 5% is a much-needed development that should go some way to arresting the shocking decline in apprenticeship starts. If we want parity of esteem between vocational and academic routes into the workplace, we need to incentivise small firms to take on apprentices. Today’s announcement marks a step forward.
Was there any news for the self-employed?
This Government’s relationship with the self-employed community has been a mixed one. However, the Chancellor has rightly responded to calls for greater funding for training within the self-employed community.
Extension of the (tax framework) IR35 rule changes that have taken place in the public sector to the private sphere must be handled with caution. Careful consideration must be given over the next two years as to how this potentially damaging rollout should be managed. The flexibility of our workforce is one of our economy’s greatest strengths – one that should be protected.
And good news for road users?
Our creaking infrastructure is holding back too many small firms – draining their productivity and preventing them from joining the digital revolution. Nine in 10 small businesses say a properly funded road network is important to their success. Crucially, they want to see to see a greater focus on ensuring local roads are fit for purpose. The £420 million of new funding dedicated to tackling the scourge of pot holes is an important intervention. Pot holes are a menace to small business owners and shoppers alike, and we look forward to more funds heading in this direction.
A further fuel duty freeze will also provide welcome relief for small firms who rely on road transport, particularly as the cost of petrol has surged over the last year.
Five facts about the 2018 budget
- National Living Wage will increase to £8.21
From April 2019, the National Living Wage will increase from £7.83 an hour to £8.21. It is estimated that this will benefit around 2.4 million workers and represents a £690 annual pay rise for a full-time worker
- The tax-free Personal Allowance will rise to £12,500
The Personal Allowance – the amount people earn before they have to start paying income tax – will increase by a further £650 in April 2019 to £12,500. This rise comes a year earlier than planned and will be maintained in 2020. This means a basic rate taxpayer will pay £1205 less tax in 2019–20 than in 2010–11
- The Higher Rate Threshold will increase from £46,350 to £50,000 in April 2019
The amount people will have to earn before they pay tax at 40% will increase from £46,350 to £50,000 in April 2019. It is estimated that in 2019–20, there will be nearly 1 million fewer higher rate taxpayers than in 2015–16
- NHS funding to increase, including more spending for mental health
The Government will increase its budget by £20.5 billion after inflation by 2023–24. Within this, the NHS will increase mental health spending by more than £2 billion a year by 2023-24. Local authorities in England will receive a further £650 million in social care funding next year
- Over £1.5 billion to support the High Street
Small retail businesses will see business rates bills cut by a third for two years from April 2019, which is estimated to save £900 million. Local High Streets will benefit from £675 million to improve transport links, re-develop empty shops as homes and offices and restore and re-use old and historic properties