In his first budget as chancellor, Philip Hammond delivered several blows to the self-employed and small business owners, mixed in with some positive news in the form of business rate support.
As of April 2018, self-employed therapists will see their Class 4 national insurance contributions (paid by those earning more than £8,060 a year) rise by 1% to 10%. This will further increase to 11% in April 2019. The change could have significant ramifications for mobile therapists, those who rent rooms or salon owners who operate as sole traders.
Hammond also announced that the tax free dividend allowance for directors and shareholders is to decrease from £5,000 to £2,000 from April 2018 to level out what he called an “unfair discrepancy” between the total taxes paid by employed workers compared to small business owners.
One potentially positive outcome for SMEs is the £300 million fund the Government is to give to local councils to allow struggling businesses a discretionary relief, following the recently announced higher business rates.
Hammond said businesses that lose entitlement to small business rate relief next year, following the rate increase, will pay no more than £50 extra a month. National Hairdressers’ Federation chief executive Hilary Hall said the association was “disappointed” there was no plan for a fundamental reform of business rates, adding, “The speed of change on the high street and the continuing threat from online retailers means there is now in fact an urgent need for business rates to be rethought.”
Hammond also announced plans for new qualifications to ensure students are “work fit”, addressing complaints from employers in a number of industries that college leavers are not ready for work. This comes in the form of T-levels, new qualifications for 16 to 19-year-olds in 15 sectors, including hair and beauty, designed to put vocational pathways on an equal footing with academic.