Business rates boost and tax promise turn-around

Chancellor Philip Hammond has presented the 2017 Spring Budget, including support for business rates and a tax hike for the self-employed.

Hammond has announced the expected package to support businesses affected by the business rates relief revaluation, with £435 million plans put in place to ensure that no small business coming out of small business rates relief will pay more than £600 more in business rates this year than they did in 2016-17.

Funding for local authorities will allow them to provide £300 million of discretionary relief to provide help to businesses most affected by the revaluation, while pubs with a rateable value up to £100,000, calculated at 90 per cent of pubs, will be able to claim a £1,000 business rates discount for one year from April. Communities Secretary Sajid Javid is expected to reveal further a funding formula ‘in due course’.

Mike Cherry, national chairman at the Federation of Small Businesses (FSB), said: “FSB welcomes the fact that the Chancellor has listened to the small business-led campaign on business rates. The £435 million of new money is a direct and much-needed response to those facing astronomical hikes in their business rates. This immediate relief is vital in the short-term, and action on more frequent revaluations will also help. But this tax remains out-of-date, so today we call for a cross-party Commission to create a simple, fair tax system for a modern economy.”

However, millions of self-employed people face an unwelcome tax rise of two per cent in National Insurance Contributions (NICs) as Hammond addressed the difference in contributions between those who are self-employed and those in employment, marking the difference as ‘no longer justified’.

Class 4 NICs will increase by one per cent in April 2018 and by one per cent in April 2019, costing a self-employed worker an average of 60p more a week in tax. The money generated would ‘support our public services and improve the fairness of the tax system’.

Controversially, the Conservative election manifesto in 2015 stated that under a Conservative government there would be ‘no increases in VAT, Income Tax or National Insurance’.

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