The Spring budget had two themes – “Building an economy that works for everyone” and “We are the party of the NHS”.
While there was considerable rhetoric related to these two themes, the measures announced to support them were rather prosaic with additional funding of £2bn for social care over a three year period and small allocations to other aspects of the NHS and a number of improvements to education. The problem being to match up statements of “too many families are still feeling the squeeze” with statements that “we will not saddle our children with ever increasing debt – there will be no 'unfunded spending'”
Anyway, the main point for tourism businesses was, as predicted, support for businesses suffering from increase Business rates and a promise that there will be consultation on a new way of calculating business rates before the next revision in 2022.
However, as many tourism businesses are owner-operated SMEs, there are changes tax treatments for NIC contributions and the tax treatment of allowances that will impact many tourism businesses.
General Economic Status
- GDP upgraded from 1.4% to 2% this year, slowing to 1.6% in 2018, before picking up to 1.7%, then 1.9%, and back to 2% in 2021
- A further 667,000 more people in work by 2021
- Borrowing set to be at lowest level in two decades by 2021, falling from £53.8bn in 2017
- Inflation is forecast to hit 2.4% this year, it will then fall to 2.3% in 2018 and 2% in 2019.
- Productivity growth will be 1.6% in 2017, 1.5% in 2018, 1.7% in 2019, 1.8% in 2020 and 1.9% in 2021.
Tourism Related Issues
- Reform valuation process – there will be a consultation before the next revaluation in 2022
- Cap on any business coming out of small business rate relief – they will only a max of £50 month
- Pubs with a rateable value of up to £100,000 will get £1000 rebate – estimated at 90% of pubs
- £300m fund for local councils to offer discretionary relief for hard-hit cases
Infrastructure and Transport
- A £690m competitive fund is being set up for local authorities tackle congestion
- Allocations of £93m for the North and £23m for the Midlands from a £220m fund that addresses pinch-points on the national road network
- Vehicle excise duty rates for hauliers and the HGV Road User Levy frozen for another year.
- The government will publish a consultation with proposals to bring the tax treatment of employer-provided accommodation and board and lodgings up to date. This will include proposals for when accommodation should be exempt from tax and to support taxpayers during any transition.
- From 13 March 2017, the duty rates on beer, cider, wine and spirits will increase by RPI inflation.
- The government will consult on introducing a new duty band for still cider just below 7.5% abv to target white ciders
- The government will consult on the impacts of introducing a new duty band for still wine and made-wine between 5.5% and 8.5% abv
- From 1 April 2017 the VAT registration threshold will increase from £83,000 to £85,000 and the deregistration threshold from £81,000 to £83,000
- The personal tax relief rate will increase to £11,500 and the higher rate will increase to £45,000. This will increase to £12,500 and £50,000 a year by 2020.
- The government will publish a call for evidence on exemptions and valuation methodology for the income tax and employer NICs treatment of benefits in kind
- The government will publish a call for evidence to better understand the use of the income tax relief for employees’ expenses, including those that are not reimbursed by their employer.
- The director-shareholder allowance to be reduced from £5k to £2k from 1 April 2018
- NI contributions will rise for the self-employed by 1% to 10% from April 2018 and then rise again to 11% in 2019
- the government will make administrative changes to the Research and Development Expenditure Credit to increase the certainty and simplicity around claims and will take action to improve awareness of R&D tax credits among SMEs.
- Following consultation, the government will increase the cash basis entry threshold to £150,000, and exit threshold to £300,000, and will extend the use of the cash basis to unincorporated landlords.
Making Tax Digital
- The government will provide an extra year, until April 2019, before Making Tax Digital is mandated for unincorporated businesses and landlords with turnover below the VAT threshold.
- To celebrate the 400th anniversary of the Atlantic crossing of the Mayflower, the government will appoint a Government Representative for Mayflower Anniversary Celebrations to assist in co-ordinating the UK wide events.
- A new £5 million fund will be set up for projects to celebrate the centenary of voting rights being extended to women for the first time in 1918.
- government will consult on proposals to redesign rent-a-room relief, to ensure it is better targeted to support longer-term lettings. This will align the relief more closely with its intended purpose, to increase supply of affordable long-term lodgings
- APD rates for 2018-19 will be uprated in line with RPI. Rates for 2019-20 will be set at Autumn Budget 2017.
Return to Work Support
- The government will work with business groups and public sector organisations to identify how best to increase the number of returnships, supported by £5 million of new funding
- 200m for fibre broadband
- The government has agreed a Memorandum of Understanding on further devolution to London and is in discussions with Greater Manchester on future transport funding
- Progress continues on city deals for Edinburgh and Swansea
- New T-Levels will replace 13,000 qualifications with just 15 with the number of hours training for 16-19 year old technical students to increase by over 50%. The new qualifications will include including a high-quality 3 month work placement for every student.