The Chancellor delivered his budget today and whilst the UK is the sixth largest economy in the world, the forecast for growth in 2017 has been significantly downgraded from 2% to 1.5%.
Key highlights from the budget speech that will affect UK businesses include:
- The National Living Wage (payable to workers aged 25 and over) increases by 4.4%, from £7.50 an hour to £7.83. This will give full-time workers a £600 pay increase which businesses will need to fund.
- The VAT threshold for small businesses will remain at £85,000 for the next two years but the Chancellor will consult on whether it should be changed to better incentivise growth.
- In a move to encourage greener transport, there will be increased company taxes on diesel cars (but not vans) but electric cars charged at work will not be treated as a benefit in kind.
- The switch from using the retail prices index (RPI) to the consumer prices index (CPI) in the calculation of business rates has been brought forward by two years, to April 2018. According to Mr Hammond, this will save businesses £2.3bn over the next five years.