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As Philip Hammond shared the 2018 Autumn Budget and thanked the British public for their hard work, he had a number of announcements for small business owners – on everything from personal tax allowance to business rates.

The Chancellor opened his Budget 2018 speech by saying it would be “a Budget for hardworking families… the strivers, the grafters, and the carers who are the backbone of our economy.” But what does this mean for small businesses?

Business and Enterprise

The Chancellor said Business Rates will be cut by one third for those with rateable values of £50,000 or less following the next revaluation exercise. This is expected to benefit 90 per cent of independent firms.

He also announced an increase in Annual Investment Allowance from £200,000 to £1 million for the next two years and that the qualifying period for entrepreneurs’ relief will increase from 12 months to two years.

Additionally the VAT threshold will remain at £85,000 for the next two years.

Small businesses will see their contributions to the apprenticeship levy reduced from 10 per cent to 5 per cent.

The National Living Wage is to rise by 4.9 per cent from £7.83 to £8.21 in April 2019.

Contractors working through personal service companies for medium-sized and large businesses will be subject to the IR35 rules, but not until April 2020.

HM Revenue & Customs (HMRC) will become a preferred creditor following insolvency.

Public Spending

Mr Hammond said that there will be £20 billion for the NHS in England, £240 million to assist with winter pressures on Social Care and £2 billion more each year for mental health by 2023-24.

Brexit

An additional £500 million will be provided to Government departments to fund Brexit preparations. This follows £2.2 billion that was announced previously and £1.5 billion announced at the Spring Statement.

Personal Tax, Housing and Welfare

Mr Hammond brought forward the increase in the Personal Allowance for Income Tax to £12,500 by a year to April 2019, increasing the Higher Rate threshold to £50,000 at the same time.

First-time buyers purchasing shared ownership homes will no longer have to pay Stamp Duty Land Tax (SDLT) on properties valued at up to £500,000.

As regards Universal Credit he committed to spending an additional £1.7 billion over the next five years.

Conclusion

The Budget includes important measures for small businesses such as a cut to business rates and a two-year increase in the Annual Investment Allowance from £200,000 to £1 million.

Contractors working through personal service companies for medium-sized and large businesses will be subject to the IR35 rules, but not until April 2020.