In his opening speech yesterday (8 March), Hammond said: “As we start our negotiations to exit the European Union, this Budget takes forward our plan to prepare Britain for a brighter future.
“It provides a strong and stable platform for those negotiations. We are building the foundations of a stronger, fairer, more global Britain.”
Hammond said growth in the UK economy picked up through 2016 and employment has reached a record high of 31.8 million people.
He added the UK was the second-fastest-growing economy in the G7 in 2016 and that the growth forecast for 2017 has been upgraded from 1.4% to 2%.
GDP, however, has been downgraded to 1.6% in 2018, after already being revised down in the Autumn Statement in November, and to 1.7% in 2019 and 1.9% in 2020.
Inflation is set to rise to 2.4% in 2017 before falling to 2.3% in 2018 and 2% in 2019.
Among the key business measures, Hammond has pledged £435m for firms affected by increases in business rates.
He said that companies losing small business rate relief will benefit from a cap that prevents their bills increasing by more than £50 a month. Furthermore, he will provide local authorities with £300m to deliver discretionary relief from those facing large bills.
£820m of tax avoidance measures have also been introduced. This action has been taken to stop businesses converting capital losses into trading losses, and there will also be a new financial penalty for professionals who create schemes that are defeated by HMRC.
Hammond also announced a reduction in tax-free dividend allowance for shareholders and directors of small private businesses from £5,000 to £2,000.
Meanwhile, small businesses and landlords under the VAT threshold will now have an extra year to prepare for Making Tax Digital (MTD) and unincorporated businesses with an annual turnover below the VAT registration threshold will have until April 2019 to prepare before MTD becomes mandatory.
Among other announcements, Hammond said the main rate of National Insurance contributions (NICs) for self-employed people will increase. Class 4 NICs will rise from the current level of 9% to 10% in April 2018 and 11% in April 2019.
Hammond also pledged an additional £2bn for social care over the next three years, £1bn of which will be available in the next year, and the sugar tax levy was confirmed and set at two separate levies of 18p and 24p per litre for sugary drinks.
In terms of education and training announcements that could potentially benefit print, Hammond said new technical qualifications, T-Levels, for 16 to 19-year-olds, will be introduced from autumn 2019 and the number of hours of training for these students will increase by over 50%.
CBI director-general Carolyn Fairbairn said: “This is a breakthrough Budget for skills. There has never been a more important time for the UK to sit at the global top table of technical education for young people.
“However, with inflation rising and the cumulative burden weighing on businesses’ shoulders, limited relief for firms hit hard by business rates falls short.”
Mike Cherry, national chairman of the Federation of Small Businesses (FSB), added: “The FSB welcomes the fact that the chancellor has listened to the small business-led campaign on business rates. The £435m 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.”
Ian Cass, chief executive of the Forum of Private Business, said the increased tax rate on dividends for business owners is a blow to UK entrepreneurs.
“These are the very people who create growth and employment, and continuing to increase both regulatory and tax burdens on them while removing rewards is hardly smart.”
A Spring Statement will now replace the Spring Budget and the Budget will become a single fiscal event held in the autumn, meaning there will be another one later this year.
For print industry reaction to the Spring Budget, see our briefing in the next issue of PrintWeek.
Update: Hammond has dropped the national insurance increases for the self-employed.
