The Chancellor used the Budget announcement as an opportunity to renew his commitment to raising Britain’s productivity, outlining that this was key to raising the nation’s pay - the central mission of his Treasury. Mr Hammond stated that he has listened to “the representation of the British Chambers of Commerce” and subsequently has made commitments to delivering on road and rail infrastructure, as well as a pledge to lessen the impact of Business Rate rises.
For our business community in Milton Keynes he announced the launch of a modern Industrial Strategy (released on Monday 27 November) that would work for all parts of the country. Indeed, this could be a Budget that, in ambition at least, attempts to provide parity of investment to boost the productivity of both London-based and regional-based
The Chancellor announced that following the National Infrastructure Commission’s report on the Cambridge-Milton Keynes-Oxford corridor he has committed to building 1 million homes along its length by 2050, with the necessary supporting rail and road infrastructure. In the coming months we will be challenging local, regional and national government to ensure that infrastructure and transport investment will be in place to help solve the challenges that hold back local economic growth, of which new housing is only one part.
In his speech Mr Hammond recognised that too much of the UK’s economic strength was concentrated in the capital and that with the Transforming Cities Fund he was backing the Midlands Engine. However, access to this investment was only secured for the six areas with elected metro Mayors. To benefit from this fund the “other cities in England” would need to demonstrate the value of their local transport priorities in bids competing for a share of the £850m. Through our close communications with our local government agencies we will keep you informed of the action they plan to take in response to this investment opportunity.
The Chancellor also made a commitment of a further £300m to futureproof the HS2 infrastructure to ensure that the Midlands Engine and the north would have rail development to support their industrial growth.
Milton Keynes Chamber joined its voice to the network of chambers across the country to campaign to halt the Business Rate rises, and the Chancellor’s speech is proof that the Chancellor has listened and reduced that burden. The announcement, to bring forward to next April the switch from RPI to CPI for indexation of rates, will collectively save business £2.3bn. Coupled with a commitment to future rate revaluations taking place on a three years basis this Budget represents an important step towards increasing fairness in the business rates system.
Corporation Tax was maintained at 19% in today’s Budget, however, the Chancellor announced changes to the way companies’ chargeable gains are calculated. The Corporate Indexation Allowance affords for the effects of inflation when calculating the chargeable gains of companies or organisations. In the Budget the Chancellor announced that the indexation allowance will be frozen from 1 January 2018 meaning that, despite falling tax rates, companies will be taxed on higher profits which is expected to raise more than £525m by 2023.
The Chancellor has also announced there will be no changes to the £85,000 VAT threshold for the next two years but that this will be reviewed. The Chancellor chose to introduce
this announcement by highlighting that in the UK we have the highest VAT registration threshold in the OECD, so we can realistically expect a reform to this threshold following this proposed review.
Further tax announcements included the application, from April 2019, of income tax for royalties paid by multinational corporations to low tax jurisdictions and a joint liability for VAT application for sellers and online market places.
For those businesses not paying over the National Living Wage the announcement of an above-inflation increase to this figure adds to other upfront costs of doing business and uncertainty about future investment and recruitment.
The staircase tax, which has heaped difficulty on thousands of small businesses that occupy split workplaces, is to be axed, with those hit set to have their original bill reinstated.
Further announcements to improve business growth include an extension and an expansion of the National Productivity Investment Fund, a further £2.3 billion of investment for research and development (R&D) and an increase to the R&D tax credit to 12%. In addition to this the Chancellor announced an investment of over £500m for “a range of initiatives from artificial intelligence, to 5G and full fibre broadband” and the commitment to double enterprise investment scheme limits for knowledge-intensive companies.
Mr Hammond also announced plans that the new British Business Bank would, through public funding of £2.5bn, allow pension funds access to long-term investments in the private sector, unlocking a potential £7.5bn of investment. These pledges were bound up with the promise that the Government stands ready “to step in to replace European Investment Fund lending if necessary.”
To get to grips with the complete picture of the Budget announcement please visit the British Chambers of Commerce page.
If you would like more information about the Budget or to discuss how the announcements will affect your business and its environment please contact Chamber Representation via firstname.lastname@example.org