We take a closer look at what the Chancellor’s Spring Statement means for UK’s key sectors.
With the main Budget now pushed back to the autumn, Chancellor Philip Hammond’s Spring Statement was largely just an update on the state of the economy, but it did include announcements that will be of interest to businesses. We take a closer look at what was covered in the speech and how it will affect our key sectors.
Although the Chancellor said specific tax changes must wait for the Autumn Budget, he announced a series of consultations on future policies.
He launched a review of the VAT system which is likely to benefit tradespeople and small businesses. It follows an Office of Tax Simplification report last year that said some firms don’t grow their business because of the tax implications once they reach the VAT threshold of £85,000. The consultation could lead to a more gradual introduction of VAT for firms with a turnover of more than £85,000 a year.
Mr Hammond also announced plans to address the problem of late payments for firms. Research by the Federation of Small Businesses (FSB) found that 84% of SMEs have reported being paid late, while 33% say one in four payments is paid later than agreed[i].
FSB chairman Mike Cherry welcomed Mr Hammond’s announcement: “The Chancellor is absolutely right to commit the Government to eliminate the scourge of late payments, which place cruel financial pressure on more than eight out of 10 small businesses,” he said.
“The poor treatment of smaller suppliers by many bigger companies is both unacceptable and holds back growth and productivity.”
In last autumn’s Budget, it was announced that business rates revaluations will take place every three years (instead of every five) following the next revaluation, in an effort to make bills more accurately reflect the current rental value of properties. The Government says it will now bring forward the next revaluation from 2022 to 2021. “This will mean businesses can benefit from the change to three-year revaluations earlier, with the first taking place in 2024″, Mr Hammond said.
A review has been launched into the future of cash and digital payments. It will look at “how the Government can support digital payments and ensure that the ability to pay by cash is available for those who need it, whilst cracking down on the minority who use cash to evade tax and launder money”.
The Government is also seeking evidence on how online marketplaces can help retailers that sell products through platforms such as Amazon and eBay pay the correct amount of tax.
With regards to the housing sector, Mr Hammond said that the Government is already working with 44 authorities that have bid for a share of the £4.1 billion housing infrastructure fund.
He announced that London will receive £1.7 billion to deliver 26,000 affordable homes – including homes for social rent – taking the total number to more than 116,000 by the end of 2021/22. A total of 215,000 new homes are also scheduled to be built in the West Midlands by 2031.
Fleet owners and motor traders
The Spring Statement didn’t offer a great deal in terms of transport policy, but the Government is to consult on proposals to reduce tax for the least polluting vans to “help the great British white van driver go green”.
It is also seeking evidence on whether the use of non-agricultural red diesel tax relief contributes to poor air quality in urban areas.
And the Chancellor said he is inviting cities across England to bid for a share of £840 million to deliver on “local transport priorities”.
Protecting your business
Whatever upcoming changes are likely to impact businesses, having the right insurance policy in place can help owners prepare for the unexpected and prevent disruption to their day-to-day activities.