As the 2016 Autumn Statement promised, this week saw the presentation of the final Spring Budget, which – given plans for an annual budget presentation providing a longer-term outlook – focused on areas of potential change since the Autumn Statement, such as the deficit. The Budget also sought to reaffirm the new government’s vision of how it would achieve a “stronger, better, fairer Britain”.
Firms using corporate secretary services like those of London Registrars are therefore likely to be particularly heartened by the Chancellor of the Exchequer Philip Hammond’s reiteration of the government’s commitment to preserving Britain’s status as a premier global business destination.
However, there were various changes announced in the Budget that could adversely impact early stage companies and other SMEs, such as business rate increases for the “digital part” of the small business economy and heightened National Insurance Contributions (NICs) for certain classes of self-employed individuals (LLPs). There were also, though, business rate cuts for certain firms – mostly local “brick and mortar” businesses such as pubs.
Meanwhile, the dividend allowance for shareholders in companies was reduced, this being judged to be “overly generous”, as part of a wider programme of changes aimed at ensuring “fairness”.
Enhanced Support for the R&D tax credit regime
The Chancellor voiced strong support for innovation, describing the research and development (R&D) tax credit scheme as an “effective and internationally competitive element of the government’s support for innovation”. He announced the rollout of certain administrative changes to increase certainty and simplicity around claims, alongside efforts to boost SMEs’ awareness of the scheme.
The Enterprise Investment Schemes (EIS) were not mentioned at all in Hammond’s presentation. However, the published copy of the Budget report indicated that existing tax reliefs geared towards encouraging investment and entrepreneurship, such as the EIS, would be subject to review by the government to ensure they are “effective, well-targeted and provide value for money”.
It remains to be seen what the implications will be of the administrative changes to the R&D tax credit regime and the review of existing tax reliefs. Here at London Registrars, we will closely follow the consequences that may unfold and advise firms – including the many using our corporate secretary services – accordingly.