Normally a couple of days after the budget and the country is going mad with criticism and some praise. This year it seems to be a bit of a “no news” story and no doubt, that’s exactly what the chancellor planned. The last thing this Government needs is more issues on their plate.
What did we see for business? Well, here’s a quick summary of the elements that are relevant to us both:
Personal Tax Allowance
Currently £11,500 and in 2018/19 will increase to £11,850. An extra £350 that owner managers can take before taking dividends. It’s not much, I agree (about £150 for an additional rate tax payer), but it will pay for a night out and a taxi home.
Currently the first £5,000 is taxed at 0%. In April 2018, it will change to £2,000.
Sorry people, that saving above has just been taken straight back and cost you a little bit more. Damn these accountants, why doesn’t anything quite end up being how it seems? This will hit the additional rate tax payers by up to £1,143.
Enterprise Investment Scheme (EIS)
The good news here for investors and early stage businesses is that “knowledge-intensive companies” can now take up to £2m under the scheme. Another fantastic change for the knowledge intensive companies is that they can use the date that their annual turnover first exceeds £200,000 in determining the start of the initial investing period under the permitted maximum age rules, instead of the date of the first commercial sale.
It’s worth some early companies looking at the definition of a knowledge-intensive company on HMRC’s website and seeing if they qualify. If they don’t, would a few small changes qualify them? Worth a go in my opinion.
Making Tax Digital
In April 2019, you will be required to do more for the VAT office in your role as a tax collector. You will be required to keep digital records and report digitally to HMRC. New software or enhanced software modules will be required to do this, which means a cost for the software acquisition and a cost for administering the process.
Most companies already do this, so only a small impact on most. The people who will suffer, however, are the very small businesses, high street independent shops etc.
No changes to this. It is still coming down from 19% in 2018, to 17% in 2020. Let’s hope they don’t change their mind on this in 2018’s budget as this is a real bonus to all businesses.
Entrepreneurs Relief (ER)
The plan is to try and enable entrepreneurs to get access to ER, even if they hold less than 5% of the stock of their businesses. The thinking behind this is that original founders raise consistent rounds of investment and dilute their equity along the way. They could end up with less than 5% and be penalised for it.
I get what they are trying to do but I don’t think it affects many people.
So, what did us entrepreneurs get? Nothing. In fact, we are a little worse off. Let’s hope Brexit is resolved soon and we can get our politicians concentrating on running our country.
Jamie Waller is author of Unsexy Business; a new book that interviews some of the UK’s best entrepreneurs about how they did it. Register your interest: www.unsexybusiness.com