Heat is turned up on international digital giants as taxation rules changed

BUSINESS EDITOR

Small businesses were treated favourably yesterday as industry chiefs praised the Chancellor for giving them the confidence to invest in their futures. With Philip Hammond repeatedly claiming that this Budget marked the “end of austerity”, he went on to “sprinkle fiscal confetti” upon consumers through personal tax breaks while turning up the heat on global digital giants.

The measures announced covered a broad range of issues from mental health to armistice commemorations and potholes, but the headline policies were the abolition of Private Finance Initiative (PFI) and the UK taking a global lead in changing taxation on major digital players such as Google, Facebook and Amazon.

Another favourable move was to raise the annual investment allowance for businesses from £200,000 to £1 million for two years. And he refused to abolish the entrepreneurs’ relief fund which was called on by other MPs.

Susie Simpson, head of private business in Scotland at PWC, said: “This will give businesses the confidence to invest in their own futures. For innovating businesses in Scotland R&D credits are now restricted to three times the total PAYE and NIC liability leaving owners with decisions to make on how hard to push innovation and when.

“For Scotland’s business owners, while the 10% tax rate and lifetime allowance of £10 million under entrepreneurs’ relief remains the same, individuals will now need to hold their stakes for two years rather than 12 months.

“This could be exemplary of the government seeking to promote longer term investments and perhaps in line with a lack of any further announcements on restrictions on pension and saving reliefs.”

Mr Hammond also said for smaller firms taking on apprentices, the Government will half the amount they have to contribute from 10% to 5%.

He said the support for apprenticeships was worth £695 million.

The measure was in addition to reforms other longterm of the apprenticeship levy announced earlier this month following criticism from businesses and figures showing fewer new starts since it was introduced last year.

Mike Cherry, chairman of the Federation of Small Businesses, said: “Apprenticeship starts have plummeted over the last year following the introduction of burdensome co-investment costs for small firms who want to bring young people into the workplace.

“Dropping the proportion of apprenticeship training costs footed by small firms from 10% to 5% is a muchneeded development which should go some way to arresting the shocking decline in apprenticeship starts.

“If we want parity of esteem between vocational and academic routes into the workplace, we need to incentivise small firms to take on apprentices. Today’s announcement marks a step forward.”

Nigel Roberts, VAT director at Johnston Carmichael, added: “There were strong rumours in the run-up to the Budget that the VAT threshold would be reduced, bringing thousands of small businesses into the VAT net.

“The chancellor has resisted this and gone further by freezing the current £85,000 pa threshold until April 2020. This is excellent news for small businesses who have enough red tape and uncertainty to manage already.”