Autumn Budget 2017: Talking points for retailers

Chancellor Philip Hammond’s autumn budget wasn’t expected to be particularly exciting. Given his (and his party’s) precarious position, there was no room for the traditional post-election tax hike that we usually see. On the other hand, poor economic metrics meant that there was little room for giveaways, either. What remained was a largely uneventful budget with few headline-grabbing announcements. Let’s take a look at the policy measures, big and small, that will most affect UK retailers.

24th November 2017

Business rates

Retailers are certainly familiar with the political hot potato that is business rates, but this year’s budget provided some good news for all retailers who pay this unpopular tax. Currently, business rates are based on the RPI measure of inflation. A switch to CPI (which is typically lower than RPI) has been brought forward to April 2018, which will provide some relief to businesses.

Pubs that are eligible for the business rate discount will see this benefit extended for a further year. Finally, future revaluations will take place every three years, instead of five.

 

The National Living Wage

Expect your wage bill to go up again next April, when the national living wage and national minimum wage increase once more. Following recommendations from the Low Pay Commission, the national living wage rate for over 25s will increase from £7.50 to £7.83 per hour. Changes for other age groups are as follows:

21-24: £7.05 to £7.38

18-20: £5.60 to £5.90

16-17: £4.05 to £4.20

Apprentices: £3.50 to £3.70

 

VAT threshold

Prior to the budget, there had been some concern that the chancellor would reduce the threshold at which small companies must register for VAT. However, it was announced that the VAT threshold will remain at its current level of £85,000 for the next two years, until the results of a review are published.

 

Investment and infrastructure

More money is being assigned to the Northern Powerhouse and Midlands Engine projects, including £1.7 billion into the Transforming Cities Fund. Councils will be able to draw on this fund to invest in transport and technological infrastructure.

Another £2.5 billion has been set aside for the British Business Bank, which provides finance to small businesses that may otherwise struggle to obtain funds from private lenders.

 

Vehicle taxes

As expected, new diesel cars that don’t meet air pollution standards will go up a tax band. Company car tax on diesel vehicles will also increase by one percentage point. However, current diesel car owners and new diesel vans won’t be affected by this tax increase.

Fuel duty remains frozen for the seventh year running.

 

Summary

This budget was undoubtedly business-friendly, with announcements of more investment in infrastructure, R&D, and digital industries. Smaller retailers in more traditional industries will be pleased to see the switch to CPI for business rates, but may be concerned about the increase in the the national living wage.

This budget didn’t make any huge changes for retailers - but its business-friendly tone is certainly a good sign for small businesses.

 

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