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Industry reacts to Autumn Budget business changes

Tom Belger | 07:30 Wednesday 31st October 2018

Monday’s Autumn Budget was the most small business-friendly Budget that Philip Hammond has delivered, according to one trade body.

The chancellor made a number of announcements which would impact SMEs and other businesses.

These included:

  • small retail businesses will save £900m with the business rates bill cut by a third for two years from April 2019
  • £675m to be spent on local high streets to improve transport links, redevelop empty shops as homes and offices and restore and reuse old and historic properties
  • annual investment allowance to increase to £1m from 1st January 2019 to 31st December 2020
  • large digital firms to pay a 2% tax on revenues they earn which are linked to UK users, from April 2020
  • large businesses able to invest up to 25% of their apprenticeship levy to support apprentices in their supply chain from April. Some employers will only need to pay 5% for apprenticeship training
  • an additional £200m investment for the British Business Bank (BBB) if no future relationship with the European Investment Bank is in place when the UK leaves the EU
  • government funding committed to the Start-Up Loans programme until 2021
  • up to £1bn of guarantee support via specialist and high street lenders to small housebuilders to be deployed through a variant of the BBB’s ENABLE Guarantee programme. 

Reacting to the statement, Mike Cherry, national chairman of the Federation of Small Businesses, said Hammond had listened to its requests across many areas of tax and public policy, putting him on the side of Britain’s SMEs.

 “This is the most small business-friendly Budget that this chancellor has delivered. 

“Through the Budget, the chancellor is now using the strength of the Treasury to back small business. 

“We have already seen a significant change of tone in recent months towards helping businesses, right from the top of government, and today represents the change of policy that backs this up.

“This is long due recognition that small firms are the UK’s job creators and community leaders. 

“The productivity challenge for this country will only be resolved by backing small business, and today marks an important step to achieve this.”

However, Mark Brownridge, director-general of the Enterprise Investment Scheme Association, felt the Budget could be entirely defunct in a matter of weeks depending on what happened with Brexit negotiations.

“Therefore, this could potentially leave SME investors in [the] dark, particularly in the short term. 

“Increasing the qualifying terms for entrepreneurs' tax relief may disincentivise some business owners from reinvesting into other SMEs and entrepreneurs, so we must continue to promote the benefits of schemes such as SEIS and EIS to ensure we Brexit-proof our nation's entrepreneurial economy.”

How have specialist banks reacted?

Carl D’Ammassa, group managing director for business finance at Aldermore, praised the increase in the investment allowance.

“This will go a long way to stimulate SME business investment and, therefore, improve their long-term prospects. 

“As we head into 2019, it is vital that businesses and the government work hand in hand to ensure SMEs are the driving force behind future economic growth and it’s great that the chancellor has come up trumps.”

Simon Brooks, co-head of origination at Investec SPF, approved the backing for the retail sector.

“Anything the government can do to demonstrate that they are supportive of reinvigorating the physical retail sector in the UK and the huge number of jobs it supports should be applauded and this significant cut to business rates sends out a positive message.” 

Tandem felt the Budget “did a lot right” and highlighted the chancellor’s decision to increase the national living wage to £8.21.

 “Financial freedom is a term that’s bandied around a lot,” said Ricky Knox, CEO at Tandem.

 “Where the chancellor might be too optimistic is in his short- term outlook.

“It’s important to remember that this is the last Budget before Brexit – there could be a sting in its tail in the form of revisions.”

Looking at how the government could increase support for small businesses further, Ewan Edwards, head of savings at Aldermore, suggested the addition of an entrepreneur Isa.

“…We believe that as well as the option of borrowing to start, lots of businesses are now looking to self-finance both at the beginning of their journey and for their future growth. 

“To aid this, we believe the next step for the chancellor should be creating an entrepreneur Isa and small business savings allowance to provide complementary funding routes for aspiring and existing SMEs.

“These would be simple to understand, easy to administer and would provide targeted support to potentially millions of people looking to build their business and start their new one.”

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