There was both good and bad news for sole traders and small businesses in today's Budget.
Chancellor of the Exchequer Philip Hammond unveiled a £435 million relief package to mitigate against rises in business rates; but he also announced increases in National Insurance Contributions (NICs) for the self-employed and a reduction in the tax-free dividend allowance.
The Chancellor said the lower rate of NICs for self-employed workers "is no longer justified". He said: "Employed and self-employed alike use our public services in the same way, but they are not paying for them in the same way."
Class 4 NICs will increase from 9% to 10% in April 2018, and then to 11% in April 2019 for those earning more than £8,060. Employees currently pay 12%. Class 2 contributions - as previously announced - will be abolished. Taken together, all the self-employed with profits over £16,250 will have to pay more as a result of these changes.
In addition, Hammond announced that the tax-free dividend allowance - introduced last year - will be reduced from £5,000 to £2,000 from April 2018.
However, there was good news for small firms worried about business rate rises. Councils will be given powers to distribute £300 million worth of discretionary relief to those firms that are hit hardest. In addition, 90% of pubs will get a £1,000 discount on their business rates bills in 2017.
Hammond promised that "no business losing small business rate relief will see their bill increase next year by more than £50 a month, and the subsequent increases will be capped at either the transitional relief cap or £50 a month, whichever is higher".
As plans for Making Tax Digital continue apace, Hammond also announced that quarterly reporting for businesses with turnover below the VAT registration threshold will be delayed by one year to allow more time to prepare for the changes.
These Budget measures were set against a backdrop of economic good news. The growth forecast for this year was raised to 2% - up substantially from 1.4% as predicted by the Office of Budget Responsibility (OBR) in November. The OBR predicts that economic growth will then slow to 1.6% in 2018, before picking up to 1.7% in 2019, 1.9% in 2020 and 2% in 2021.
In all, this was a Budget that was fairly light on measures - the BBC reports that there were fewer than half the number of announcements made in the 2016 Budget. This will be the last time the Budget will be delveired in Spring, before the Government moves to one main Autumn Budget every year.
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