Steve Theaker, partner of Newport-based chartered accountants, UHY Hacker Young, reviews the spring Budget announcement and what it means for Welsh businesses.

Last week saw Chancellor Philip Hammond step up to deliver his first spring Budget, which many businesses hoped would set out assurances for a post-Brexit future. While the day’s message was designed to convey the keep calm and carry on spirit, details were somewhat lacking. I’m not sure if the word Brexit was even used.

The Budget wasn’t just limited on details regarding the exit from Europe, it seemed limited in general. We’ve become accustomed to Chancellors using the Budget to announce sweeping tax changes and new policies. However, at the last Autumn Statement (the last Autumn Statement ever) Mr Hammond stated that such changes would only be announced once a year, so maybe he’s holding something back for later this year.

The announcements that were given may have made uncomfortable listening for many small business owners. The self-employed, the entrepreneurs who are running their own companies, discovered that they will see an increase to their National Insurance Contributions. Going forward, the self-employed will see their rates move closer to that paid by employees. This has been widely, and rightly, called out as a disincentive to those considering founding their own enterprises, businesses which would likely lead to new job creation. In April 2018, the level of National Insurance contribution payments for self-employed people will rise to 10% and then to 11% in April 2019. The justification for the increase was an intent to solve the NI shortfall, but it’s been received as a contradiction to a 2015 election promise made by the Conservatives.

The lowering of the dividend allowance for those who own their own business is another blow, which will do little to foster entrepreneurial spirit. The allowance change applies to company owners who choose to pay themselves via a dividend, instead of taking a salary. In April 2016, it was announced that business owners who choose the dividend option would receive a tax-free allowance of £5,000. This year the Chancellor cut that allowance to £2000.

Small business owners and sole traders may feel some relief that introduction of the Making Tax Digital (MTD) policies have been delayed for one year for businesses under the £85,000 VAT threshold. However, Mr Hammond’s plans to introduce MTD for businesses over this threshold remain unchanged. The majority of businesses and landlords will soon be required to file online returns four times a year, followed by an annual adjustment. While smaller businesses now have an extra year to prepare themselves for this radical change to the tax system, the fact remains that MTD will be an unquestionably complicated and time-consuming process for companies of all sizes.

On a positive note, we should look to previous announcements which still stand. There were no changes to National Insurance contributions payed by the employed (or their employers). The personal tax-free allowance saw no changes either, so it is still set to rise to £11,500 this year, and then £12,500 by 2020. Higher-rate tax is currently due on earnings of more than £43,000, but this threshold will rise to £45,000 from April 6. The Chancellor also announced the creation of a £5million fund to support people returning to work after a career break which will undoubtedly help those who return to work after caring for children, namely women. The increase in free childcare that was announced last year will be a great help to families, but in Wales we’re yet to see what the Welsh Government does, as parents in Wales currently receive less free childcare than their English counterparts.

Overall, this budget didn’t deliver the assurances we had hoped for, but the optimists among us may be rewarded in the Autumn Budget, only time will tell. If the spring announcements have left you feeling in need of fortification, keep in mind that the inflation increases on beer, cider, wine and spirits will increase by 3.9%. That’s an extra 2p on your pint of beer, or 1p on a pint of cider. But, if you’d rather just drive home, you can be glad that the duty on petrol stayed the same.