Budget 2017 – how was it for you?

 

As with all budgets, this one produced winners and losers. How it affects you will depend on a wide range of factors such as your employment status, the value of any business premises you work from and, of course, how much you earn.

For the self-employed and owners of small businesses, the headline item was the increase in National Insurance Contributions (NICs).

So unpopular has this proved, not least among the Chancellor’s colleagues in his own party, that Prime Minister Theresa May has agreed to delay the legislation the rise will require until the autumn.

Also relevant to small business owners in the budget were the reduced tax threshold on dividends and the imminent increases in business rates, the taxes businesses pay on the value of the premises they rent or own.

However, while citing a broken manifesto pledge and mixed messages from the government to risk-taking entrepreneurs, a group of business owners we've spoken to remain an optimistic lot. 

Jon Ostler, CEO and founder of financial services, utilities, entertainment and retail comparison site Finder.com, arrived in the UK at an uncertain time, with the country having just voted in favour of Brexit. However, he sees robustness and growth in the UK economy.

On the NICs issue, he says: ‘Not being self-employed, I’m not directly affected by the increase. It’s a positive change for our graduates who are on lower incomes, however, we use a lot of freelancers and they’re feeling sore about this adjustment.’

The other main issue for Jon is business rates. ‘This really needs to be resolved,’ he told us.

Sarah Dillingham is managing director of Case Study Ninja, who help to create compelling case studies that win work. Like many new entrepreneurs, she’s paying herself minimal wages in the early stages of her business’s growth.

Sarah welcomes the reduced nil band rate for dividend income from £5,000 to £2,000, but has reservations about the increased NICs for self-employed workers.

‘This company wouldn't be where it is without freelancers,’ she said. ‘We rely on them to work with us on a flexible basis and at a good price. It's discouraging for them that their NICs will go up. The Conservatives have been all about empowering small businesses and entrepreneurs, so this is a major conflict.

‘It’s not the end of the world and it won’t destroy my business. However, it sends a confused message to people willing to take a risk. I’ve been a freelancer before, so I know how precarious it can be. The tax regime made the risk easier to live with, so that’s why I’m frustrated with this rise.

‘As a digital business, we’re not really affected by business rates increases, however, I imagine it will be a real issue for SMEs with premises.’

The most upbeat about Budget 2017 among those we spoke with was Joseph Bradfield, who handles PR and communications at Sussex Innovation Centre.

He said: ‘From our perspective, the important thing to take away from the latest budget is that there are still plenty of incentives available for knowledge-based start-ups of the kind we work with. Nothing is happening to R&D tax credits, SEIS (Seed Enterprise Investment Scheme), or EIS (Enterprise Investment Scheme) in the near future, and we’re still seeing some very generous grants for technology, science and engineering projects from Innovate UK. The headlines needn’t deter budding entrepreneurs in those fields from starting a business.’

To find out more about the budget and how it will affect you and your business, download the Smarta Budget Summary 8 March 2017.

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