Spring Budget recap and reaction

Chancellor Philip Hammond this afternoon signalled tax rises for the self-employed and company directors as he pledged to lay the groundwork for a "brighter future" for Britain as it looked to leave the EU.

Mike Cherry, Federation of Small Businesses chairman, said: "The National Insurance rise to 10 per cent next year and 11 cent in 2019 should be seen for what it is – a £1bn tax hike on those who set themselves up in business.

"Future growth of the UK’s 4.8 million-strong self-employed population is now at risk. Increasing this tax burden, effectively funded by a reduction in corporation tax over the same period, is the wrong way to go.”

Turning to corporate taxation, he unveiled measures to slash the tax free dividend allowance from £5,000 to £2,000 in April next year. Mr Hammond said the dividend allowance had encouraged the proliferation of incorporation.

In his Spring Budget he also unveiled a number of business rates relief measures, including a £1,000 discount for pubs with a rateable value of under £100,000. He said that measure would affect 90 per cent of pubs in England.

Mr Hammond said that those three measures amounted to an extra £453m cut to business rates.

Mr Hammond also announced £2bn for social care in his Budget spending package, as well as £90m for the North of England as part of a drive to address pinch points on the national road network.

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“It’s good to see that the licensed trade is being given specific relief as this is a sector that has publicly struggled in recent years, and while it looks many like most areas should see reductions in business rates, we welcome the fund to deliver support to what the Chancellor called ‘hard cases.’

“What these announcements will mean for businesses in the long term is difficult to predict, and as yet we don’t have full details of how the reform of the system, or the allocation of funds via the new discretionary relief system, will work.”

Jane Parry, managing partner at PM+M: "The chancellor’s opening statement about productivity still being too low, families feeling squeezed, the need to make Britain ready for its ‘global future’ outside the EU and having an economy that ‘works for everyone’ was all pretty standard stuff which no-one would really disagree with or be surprised by. That tone ran through a Budget that was clearly designed to reassure the markets as we approach the triggering of Article 50.

"I think the business community will be largely underwhelmed, but at the same time business owners may welcome not having more government changes thrown at them.”

Colin Tice, tax partner at Cassons: "The number of self employed has increased significantly over recent years, meaning they have become a target for tax increases.

"The smallest self employed businesses with turnover less than £85,000 received a small bonus by the deferral of the introduction of “Making Tax Digital” quarterly reporting until April 2019."

Richard Halstead, interim region director in the North West for EEF: “Current economic indicators offer the Chancellor confidence about the resilience of the UK economy, but we remain some way off from possible Brexit uncertainty. As such, the Chancellor is right to be pragmatic, recognising the need to avoid jam today and saving the fiscal jam tomorrow to use wisely if the economy encounters turbulence during the process of exit from the EU.

“While this Budget doesn’t have all the answers to our future growth challenges, the evolution of the R&D tax credit, action on digital infrastructure and regional road networks, together with additional investment in technical skills and lifelong learning is a solid foundation on which future statements must build.

"However, with inflation rising and the cumulative burden weighing on businesses’ shoulders, limited relief for firms hit hard by business rates falls short. Firms are wholly committed to the health and wellbeing of their people, and are pleased to see an increase in spending on social care.”

Martyn Kendrick, regional director of Lloyds Bank Commercial Banking in the North West: “Many companies will welcome the Government’s commitment to boosting skills among 16- to 19-year-olds through the creation of ‘T-levels’.

“The new ‘T-levels’ will particularly help construction and manufacturing companies across the North West, helping to provide both employees and employers with the specific skills that they need to thrive.

"The measures will increase the tax costs for entrepreneurs looking to build their own businesses and bolster the country’s economy, in addition to adding to the burden for existing businesses.”

James Thompson, Taylor Patterson: "Having become accustomed to the twists and surprises of George Osborne’s budget announcements, Philip Hammond has left us, as Wealth Management and Employee Benefit advisers, with very little to comment on.

“In relation to this, the re-commitment to the the Northern Powerhouse and investment into road infrastructure in the North is welcomed by the IoD, as it signals the Government’s priority for the continued development of the region.

"Finally, we welcome the announcement of a business rates consultation which will help companies in the North West who have been feeling the pressure from last year's revaluation. These measures, including the fund for local councils to offer flexible, discretionary assistance should work hard to help companies bring forward productivity-boosting investment."

Mark Rathbone, partner, Brabners: “Detail on transport infrastructure was perhaps not as expansive as many businesses would have liked. The £90m for road improvements in the North will be welcome news for commuters and hauliers, though it is not a huge allocation given government’s plans to increase national infrastructure spend to 1.2% of GDP per annum.

“We continue to see grand schemes like high-speed rail and the Heathrow expansion announced without any national strategy outlining how our infrastructure, planned and existing, can better connect to serve the whole nation most effectively. There has been significant recent private investment and leadership on infrastructure in the North West. A detailed national strategy to back the proposed increase in public spending would help our businesses plan for the future and encourage further private sector investment in the UK economy.”

James Morris, tax partner at RSM: "The chancellor used this Budget to hone his stand-up skills rather than announce a wide raft of tax measures but between the jokes, there were some significant revenue raisers.

"Last year’s Budget red book stretched to 148 pages, this year’s was just 64 pages. Perhaps the chancellor is holding back from more significant tax reform at the first Autumn Budget."

Steve Blacker, partner, innovation reliefs and incentives, KPMG in the North West: "Business will welcome the Chancellor's announcement in the Spring Budget to reduce the administrative burden on claiming R&D credits and tax incentives. Simplicity and certainty are key to business.