A budget for small businesses?

The recent budget was noteworthy for being light on content.  Small businesses however will probably feel as though someone stole their sweeties after being hit by a triple whammy of costs and charges

Firstly of course, there was the now notorious increase in Class 4 National Insurance.  Many small businesses had been looking forward to the £200 or so saving that the abolition of class 2 would bring, but Mr Hammond took that away with an increase of roughly £400 in each of the next two tax years for small businesses paying the top end of self employed National Insurance, so by 2019-20 they will be paying £50 a month more

Secondly, there was the confirmation that quarterly tax reporting will come in next April for private landlords and unincorporated businesses.  HMRC’s response to the sensible and measured proposals sent to them in response to their plans has basically been to ignore them.  The smallest businesses get a one year deferral, but for most the system comes in next April. Given that one of the larger software suppliers has said the first versions of their Making Tax Digital (MTD) software will be available later in the year, that is a very tight timetable, and to make matters worse, it seems there will after all be a cost for the software.  No doubt the “savings” HMRC promised will turn up eventually

If all that was enough to make small businesses think of incorporating (which would at least defer the start of MTD), the final whammy coming in next year is the reduction to £2,000 of the dividend allowance – effectively clawing more tax off hard pressed small businesses whose right to extract profits by dividend had already been attacked in last year’s budget by the surprise withdrawal of the dividend tax credit

All in all, not really a very friendly budget for small businesses