It will come with little surprise that the second budget of 2017 failed to offer significant headline announcements, despite the rumour mill going in to overdrive during the past few days.
The Chancellor delivered a budget speech based predominantly on the economic climate, with specific focuses on growth and debt, especially given the backdrop of the impending ‘Brexit’ effect. Growth and decreasing unemployment bring optimism for a post ‘Brexit’ Britain and offer some reassurance to family business owners - although there will be challenging obstacles ahead.
The predictions earlier this week suggested that the VAT registration threshold would reduce significantly, although thankfully this has not come to fruition. Not just saving the businesses which would have been affected by increased administrative duties - and further pressure on margins - but also allowing more time for them to get ready to enter the Making Tax Digital system.
The workforce within a family business are usually seen as an extension of the family, although the increase in National Living Wage (NLW) will place a minimum 4.4% salary cost increase from April upon many businesses. The likely impact of this will be even higher when employer National Insurance Contributions (NIC) and auto enrolment responsibilities are considered.
Companies have been targeted through increases in the cost of providing employees with a company car and the freezing, and subsequent removal, of indexation relief when assets are disposed of. However, companies which engage in research & development have seen the tax credit rate increase by 1% to 12% and fuel duty has once again been frozen. From April 2018, allowing employees to charge their electric vehicles whilst at work will no longer be a benefit in kind!
The future will be interesting for all businesses, although challenges and change brings about innovation and adaptation, which usually stimulate growth and will ensure family businesses continue to thrive.
Contact Steven for advice following the recent budget on how this will affect you and your family business.
