Philip Hammond delivered his first Autumn Statement as Chancellor today. As expected, it was rather cautious, given the general uncertainty, as we prepare for exit from the EU.
One of the biggest announcements was the abolishment of the Autumn Statement. The main Budget will instead be moved from Spring to Autumn. From 2018, the Budget in Spring will be replaced with a fiscal statement.
The key announcements affecting SMEs are set out below:
Corporation Tax will continue to be reduced to 17% by 2020, as was announced by the former Chancellor, George Osborne, in his Budget earlier this year. The rate at the start of the parliament in May 2015 was 20%.
Business rates is a type of tax that is calculated according to the rental value of the property that a business uses. With many businesses now based on the internet, critics have queried why a company should be taxed based on the physical space it uses.
There has been criticism of the existing structure of business rates for some time, with many arguing that it is outdated and should be abolished for smaller businesses altogether.
Today Mr Hammond announced that small businesses in rural areas will be given 100% tax relief worth up to £2,900 per year, by increasing the Rural Rate Relief. All other companies will benefit from a further £6.7bn business rates relief over the next 5 years, but further details haven’t been released yet. Any further details will likely be met with disappointment by many those businesses which have been pushing for the overall rates system to be abolished.
Employee Shareholder Status
An employee shareholder is someone who agrees to give up certain employment rights, in return for shares in the company. There are also a number of tax advantages linked to employee shareholder status. However, Mr Hammond announced that these tax advantages are to be abolished, for arrangements entered into on, or after, 1st December 2016. He said that this is in response to growing evidence that the status is being primarily used for tax planning purposes by high-earning individual. Without any tax advantages, employee shareholder status has effectively been abolished.
If you would like to discuss how any of these announcements might affect you or your business, then please don’t hesitate to get in touch with one of our commercial solicitors on 0845 287 0939 or complete an online enquiry form.