By Yvonne Chappell
Grant Thornton Northampton
THE Chancellor has delivered his final budget before we leave the EU and whilst expectations were low during the build-up, behind the politics, there were several surprise announcements which could have a big impact on businesses here in Northamptonshire.
To kick off, Phillip Hammond painted a rosier picture of the UK economy than many anticipated with revised forecasts predicting sustained, albeit relatively low, growth over the coming years. This gave the Chancellor some much needed wriggle room to outline a series of significant spending commitments.
For smaller firms with a rateable value of £51,000 or less, business rates were reduced by a third. This will result in an annual saving of up to £8,000 for the vast majority of independent shops, pubs and restaurants which fall within this bracket.
The move will be warmly welcomed by Northamptonshire businesses who will be able to reinvest the savings to support their growth. However, it was disappointing to see no further measures towards simplifying the complicated tax system to relieve some of the red tape they face.
Slightly overlooked was the £675m allocated to a Future High Street Fund to help councils draw up plans to transform the High Street. This is an important area of focus in a rapidly changing landscape as businesses face tough competition from online retailers and ties in with our own ambition at Grant Thornton as we work with local organisations to help reshape an economy fit for the future.
On the other side of the coin, the Chancellor announced a new digital services tax targeted at large tech companies such as Facebook, Google and Amazon. It will be important to see the finer details to understand how this will work in practice before we can assess to what extent this will put physical and online businesses on more of a level playing field.
The Chancellor also made some targeted amendments to the Entrepreneurs Relief rules, including an amended qualifying shareholding definition with immediate effect to require five per cent of economic rights as well as share capital and voting rights. The practical impact of these changes is that many shareholdings previously entitled to Entrepreneurs Relief will no longer qualify.
There was positive news for employees with the OBR forecasting sustained wage growth over each of the next five years. The surprise announcement that the personal tax allowance will rise to £12,500 and the higher rate threshold will increase to £50,000 earlier than expected will further help put extra money in people's pockets.
This should help stimulate spending and provide a boost to the local economy although the savings may not be as high as suggested when the changes to the National Insurance Contribution thresholds are taken into account
Overall, it was an ambitious budget with several big giveaways and more winners than losers. The headline figures also follow the trend we are seeing here in the county with our latest Northamptonshire Limited report highlighting strong growth, profitability and employment amongst local businesses.
However, with Brexit negotiations still ongoing, there is still a lot of uncertainty. In that sense, the message to businesses remains the same: whilst there is every reason to be confident about the future, there is still a need to think about your 'no-regrets' Brexit planning to ensure you are ready should the road ahead get slightly more bumpy.
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