The Chancellor’s final Budget before the UK’s scheduled EU exit placed entrepreneurs front and centre and included a clutch of welcome commitments to back them. With the promise that “entrepreneurs must be at the heart of a dynamic economy,” the Chancellor made a series of notable announcements that, taken together, provide a welcome boost for start-up businesses.
- The Chancellor resisted calls to scrap entrepreneurs’ relief (albeit with changes to the qualifying period), raising the annual investment allowance to £1 million.
- Nevertheless, there were changes to the conditions to qualify for Entrepreneurs relief The new conditions require anyone claiming the relief to be beneficially entitled to at least 5% of the company’s distributable profits and
5% of the assets available for distribution to equity holders in a winding up.
- The qualifying period over which conditions must be met was extended from 12 months to two years. Entrepreneurs considering a sale should take note.
- A consultation was announced on limiting the benefit of Research and Development tax relief for small and medium-sized enterprises. The proposal is to reintroduce a cap on the amount of payable tax credit that can be claimed by a company.
- The Chancellor cut the business rates bill by a third over two years for companies where the rateable value is £51k or less.
- The Government will legislate in Finance Bill 2019-20 to restrict companies’ use of carried-forward capital losses to 50% of capital gains from 1 April 2020.
- Green agenda — a plastics tax was announced on manufacture and import of plastic that includes less than 30% recycled material
- The Government will extend to 2021 the funding of the Start-Up Loans Programme for its British Business Bank (BBB), the UK-wide economic development bank, enabling it to continue providing loans and mentoring to entrepreneurs.
- The BBB will also benefit from up to £200 million of additional investment in UK venture capital and growth finance in 2019-20 if no agreement is reached with the
- European Investment Bank Group (EIBG) before the UK leaves the EU on 29 March 2019.
- The Government announced it will provide £5 million to support up to 10 local areas to develop proposals for new University Enterprise Zones, promoting collaboration between universities and businesses, supporting start-ups and scale-ups and sharing management skills.
- Changes to the National Insurance (NICs) Employment Allowance have also been announced. Currently, employers of all sizes may reduce their Class 1 NICs liability by £3,000 per annum.
- The off-payroll working rules that have applied to the public sector from 2017 will be rolled out in the private sector from 6 April 2020. This change shifts the responsibility for ensuring compliance with these rules and applying tax and NICs due from the personal service companies or intermediaries to the party paying the individual’s personal service company. There will be an exemption for small organisations.
- Apprenticeship support for smaller firms — contributions to halve from 10% to 5%.
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. This briefing does not constitute advice nor a recommendation relating to the acquisition or disposal of investments. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.
This article was previously published on Smith & Williamson prior to the launch of Evelyn Partners.