Autumn Budget 2018 predictions: what small businesses should know

The Autumn Budget 2018 is on 29th October and small business owners should be paying close attention. Here are a few predictions of what will feature in the Chancellor's speech.

This year’s Autumn Budget is certainly an unusual one.

First of all, it’s happening on Monday 29th October (it’s normally on a Wednesday) to get it done before vital Brexit negotiations in early November. It’ll also kick off at 3:30pm, later than the normal lunchtime slot.

However, as per, there are likely to be announcements that affect small business owners. Here are just a few of the rumoured proposals from the Chancellor.

Business rates relief for small shops

Let’s kick off with some good news: Hammond is set to slash business rates for almost half a million small high street retailers. An immediate cut of £900 million is forecast for smaller businesses as part of a £1.5 million commitment to helping those threatened by online giants like Amazon.

The Budget will also include a £650 million transformation fund for local high streets, revamping infrastructure and transport access.

Capital gains tax break for landlords

The Chancellor may bring in a capital gains tax break for landlords who sell properties to tenants who have been renting for at least three years.

As it stands, landlords pay up to 28 per cent in capital gains tax when they sell their property. Under this change, profits on growth would instead be split between the landlord and the tenant.

Controversial VAT raid scrapped

Hammond was reportedly considering a VAT raid on small businesses. VAT is currently paid on turnover of £85,000 or more, but he wanted to halve it to £43,000. This was expected to affect half a million small companies.

“He dropped the proposal after a barrage of complaints from MPs and small business groups”

Thankfully, he dropped the proposal after a barrage of complaints from MPs and small business groups. Instead, he is expected to freeze the £85,000 threshold until 2022. After that, he wants to introduce a sliding scale where the more a small business earns, the more they get charged in VAT.

Green incentives and taxes

The government is also likely to review green incentives and taxes, looking across the supply chain to reduce waste and single-use plastic.

Jayne Harrold, PwC’s UK environmental tax leader reckons this could be in the form of taxing raw materials and taxing additives that make recycling more difficult, consumption taxes at the point of sale, introducing a deposit and return scheme and taxing incineration.

Plastic straws and stirrers could be banned in Autumn Budget 2018

The previously-mentioned latte levy may also be on the cards.

Increase in gas tax for firms

The Sun reports that there are also plans to hike the tax on gas for firms to encourage them to move over to renewable energies. The Chancellor wants to equalise the tax on gas and electricity, according to a Treasury source.

This move could cost businesses up to an extra half a billion a year on energy bills.

IR35 rule change for the ‘synthetic’ self-employed

A crackdown on certain self-employed workers may be on the way, according to a BBC report. Hammond is targeting those who take on work as a private services company but are hired by employers, meaning that they get a national insurance tax break.

The Treasury expects that a third of self-employed people do this.

Changes to the rules would see these workers paying the same national insurance rate as employees rather than paying the self-employed rate.

Experts have warned that this will drive some self-employed workers out of business or into early retirement.

Fuel duty freeze

May says that fuel duty will be frozen for the ninth year in a row, which is welcome news to small businesses who rely on their motor for business.

Increase in beer duty

Beer duty is expected to increase after Autumn Budget 2018

The government is planning to increase beer duty by 3.5 per cent, adding 4p to the cost of a pint.

This will put further strain on pub owners. Figures from the Campaign for Real Ale reveal that 18 pubs a week are shutting in Britain, with a whopping 476 closing in the first half of 2018. That’s 13 more than in the last six months of 2018.

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Anna Jordan

Anna is Senior Reporter, covering topics affecting SMEs such as grant funding, managing employees and the day-to-day running of a business.

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