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Key takeaways from the Spring Budget for SMBs

Tax specialist, Haydn Rogan, looks at some of the key announcements from the Spring Budget and what they mean for small and medium-sized businesses.

Philip Hammond today (8 March) delivered his first Spring Budget speech. Tax specialist, Haydn Rogan, looks at some of the key announcements and what they mean for small and medium-sized businesses.

Business rates

The Chancellor’s move to ease the burden placed on smaller businesses by the rates re-evaluation through a measure that will cap the rates paid by firms coming out of small business rates relief, meaning they will not face an increase of more than £50 for a year, will go some way to shield smaller businesses from the changes in the short-term. But it will be of little comfort to businesses with a rateable value that exceeds the threshold.

Retailers and small business owners are already struggling to compete with online firms. We’d like to see the Government consider more substantive reform to alleviate the current system’s problems, which do not reflect the move from bricks and mortar to a digital economy, instead of providing transitional relief to placate businesses that are most negatively impacted by the changes.

Vocational training reforms

Mr Hammond’s overhaul of vocational training is a welcome sign that the Government is taking the challenge of tackling the skills gap faced by the UK’s mid-sized firms seriously. We’d welcome a clear and definitive steer on how the new ‘T-levels’ will fit into the overall picture of vocational training post-16 years so that the country’s businesses can plan their future recruitment strategies.

As a next step, the Government must ensure it continues to work closely with employers and colleges to give young people a clear, focused range of vocational training options when they leave school.

R&D tax relief

A commitment towards the reduction of the administrative burden required to receive R&D tax relief is something to be welcomed. Innovation is an important part of business growth and the encouragement and facilitation of new approaches and ways of thinking is crucial, especially in the UK’s post-Brexit economy. Unfortunately, many small and mid-sized companies are still not claiming the tax reliefs they are entitled to. In some cases, it is due to increasingly complex administrative requirements, but in other instances it is due to lack of awareness.

As well as a strategy to simplify the qualifying conditions, these new measures should be coupled with efforts to increase awareness, otherwise the main beneficiaries are likely to be larger firms, better versed in understanding the tax system.

Making tax digital 

Mr Hammond has reacted to widespread criticism of the unrealistic implementation timetable for quarterly digital tax returns and a delay for small businesses should give them more time to prepare. However, a lack of public awareness of the new requirements is the real issue that needs to be addressed.

Many individuals and businesses we have been speaking to are either not aware of the new requirements, or aren’t ready for the change. We’d call on the Government to do more to communicate what firms need to do to comply and prepare for the changes.

Corporation tax

With the exception of previously announced reforms to substantial shareholding exemption, corporation tax loss relief rules, restrictions on interest deductions for larger corporates and the finance bill set to be published on March 20th, it’s good to see that Mr Hammond has, from a corporate tax perspective, given firms a breather in today’s Budget. However, it was surprising to see a lack of new anti-avoidance measures, something that has come to be expected in every Chancellor’s speech.

It would have been good to see a more concerted effort from the Government to simplify the corporation tax system and look to reduce complexity. However, with the inexorable march towards digital tax returns, part of the overall business road map and modernisation of the tax system announced during George Osborne’s tenure, there are likely to be significant practical and technical issues around the corner.