The Autumn Budget announcement showed some interesting developments. Here are a few key points on what to expect from it in the near future:
Lower growth to be expected until 2022
- Interest rate increases might be moderate and unemployment might rise, but on the other hand the UK government needs to control household debt, which has increased 7% in the last 5 years.
Borrowings to increase from next year
- Increases are the result of annual government borrowings being at its lowest level since the financial crisis. It would need to be done with caution as it might effect inflation, which is already under pressure.
Some help in the housing sector for first time buyers
- Election positive and this is good for the housing sector but the recent, and possible further, rise in interest rates will also have a great impact on the market.
More money for the NHS
- This is of course a positive development but keeping in mind that it will require government borrowings.
Hardly any changes in pensions
- But this may be good for any potential forthcoming election
Stronger but better regulated incentive for EIS
- This is great for investors and start-ups in particular
Business rate change :
- This change is linked to CPI rather than RPI and therefore good for small businesses
Small businesses have welcomed the chancellor's announcements for the most part, which included aspects that will save them a lot of money. The switch to base the annual increase on business rates on the consumer price index (CPI) rather than the higher retail price index (RPI) in addition to evaluations taking place every 3 years instead of every 5 years, will help reduce steep rises experienced by businesses this year. Slightly disappointing for small businesses is the fact that there still will be a rise of a bout 3% in April in line with the CPI, which many small business leaders hoped would be frozen.
Additional good news is that the staircase tax, introduced in September of this year, has been abolished. This tax meant that businesses in offices linked by communal lift, corridors or stairs should be treated as occupying more than one property, meaning receiving multiple bills and costing tens of thousands more.
Businesses will also be impacted by the increase of the National Living Wage from £ 7,50 to £ 7,83. They will need to ensure that they are paying employees aged over 25 the new rate from April 2018 onwards.
The one thing missing in the announcement, which we at Akoni support, is an Entrepreneur ISA as recommended by Aldermore and a Small Business savings allowance, to encourage businesses to save for future investments. We will keep you updated when things develop in this regard.
If you have any questions about the budget we'd be happy to share our views and to hear from you.