With the uncertainty of Brexit holding us to ransom as a nation, the highly anticipated Autumn Budget 2017 was delivered in a speech by Chancellor of the Exchequer Philip Hammond yesterday afternoon. Just in case you were too busy building your small business to watch it all, we’ve got you covered! Check out the key highlights and policies that affect micro and small business owners, startups and aspiring entrepreneurs below.
We’ve split it into four key categories and have summarised the main policies laid out in the Autumn Budget 2017.
1. Technology and Innovation
The UK government seems to have ambitious plans to boost the economy by investing in the future of technology and supporting the growth of an increasingly changing “digital economy.”
GovTech Fund: the Autumn Budget 2017 commits up to £20 million in funding over 3 years from 2018. Public bodies will be able to access this fund to support procurement of innovative products through the Small Business Research Initiative (SBRI), spearheaded by the national innovation agency – Innovate UK (formerly known as The Technology Strategy Board).
GovTech Catalyst: the UK government plans to establish a central unit within the Government Digital Service to give businesses and innovators a clear access point to government. This unit will give small business owners the opportunity to collaborate with the UK government to solve real public sector challenges. The hope is that this will grow and diversify the UK digital economy whilst also allowing the public sector to benefit from emerging technologies.
Research and Development (R&D): the UK government plans to increase the rate of the R&D expenditure credit from 11% to 12% from 1 January 2018. The aim is to boost the confidence of small business owners when making R&D investment decisions. Along with this increase will come a new Advanced Clearance Service for R&D expenditure credit claims.
International Talent: to support its agenda for innovation and R&D, the government wants to entice top international scientific and research talent to work in the UK. We can expect a change in immigration rules to allow leading scientists and researchers to apply to settle in the UK with less frustration, as well as speeding up the application process for highly-skilled international students to apply work in the UK after finishing their degrees. This was accompanied by the promise of less red tape and relaxed testing to benefit current and future leaders in the digital technology, science, arts and creative sectors.
2. Access to Finance and Banking
Enterprise Investment: The Autumn Budget 2017 announced plans to unlock over £20 billion of capital investment to fund growth in innovative firms over the next 10 years. This will include establishing a new £2.5 billion Investment Fund managed by the British Business Bank. Investors funding knowledge-intensive businesses through the Enterprise Investment Scheme can expect to see their annual allowance double. The government has pledged to support small businesses to get the finance they need by extending the British Business Bank’s Enterprise Finance Guarantee to March 2022 and expanding the programme to support up to £500 million of loans per annum.
The British Business Bank will also support emerging clusters of business angels outside London through a new commercial investment programme. This is the government’s response to the consultation ‘Financing Growth in Innovative Firms’ republished alongside the Autumn Budget 2017.
The government will also work with businesses, lenders, insurers and the British Business Bank to overcome the barriers to high growth and offer a much needed boost to intellectual property-rich firms, such as those in the creative and digital sector.
Supporting competition: in agreement with the European Commission in September 2017, the Royal Bank of Scotland (RBS) will fund and oversee a £775 million package of measures designed to improve competition in the UK bus
iness banking market. Eligible smaller banks will also receive support to help them compete more effectively in the market. This could be a game-changer for Fintech startups.
Supporting exporters: the UK Export Finance (UKEF) will introduce a new guarantee to banks designed to increase liquidity in the supply chain. This is aimed at improving exporters’ access to capital and enabling their suppliers to fulfil new orders.
3. Income Tax
Personal Allowances: perhaps a more welcome update in the Autumn Budget 2017 was the announcement that the personal allowance will increase to £11,850 in 2018. T his figure will eventually rise to £12,500 by 2020.
Income tax: it was also announced that the higher rate threshold (HRT) for tax payers will rise to £46,350 by 2018 also. We can also expect this threshold to increase to £50,000 by 2020.
Skills and Employment
Skills and training: nearly 50% of UK employers working in STEM (state what stands for) report that they struggle to recruit people with relevant skills. The Autumn Budget 2017 commits to invest an additional £406 million in maths and technical education, and to helping people develop the necessary skills required to flourish in our changing economy.
Minimum wage: based on recommendations of the independent Low Pay Commission (LPC), the government will increase the national living wage (NLW) by 4.4% from £7.50 to £7.83 from April 2018. The UK government will also accept all of the LPC’s recommendations for the other NMW rates to apply from April 2018. For youth rates, this represents the largest increase in 10 years.
So there you have it. A bare bones recap of key policies that are sure to affect small business owners nationwide. We’d love to know your thoughts and equally frustrations. Did the Right Honourable Philip Hammond get it right? Is the Autumn Budget 2017 a welcome change for small business owners or has it missed the mark? Comment below and feel free to share this article 🙂
This commentary was drafted based on the policy document Autumn Budget 2017 published on 22 November 2017.