Chancellor Philip Hammond has been told to follow up his dramatic Spring Budget U-Turn on proposed National Insurance increases for the self-employed by reversing planned tax rises on small business owners.
Regional accountancy firm Bishop Fleming, which has a large office in Bath, welcomed the Mr Hammond’s decision to scrap the NI self-employed increase, which came in the face of a potential Tory back-bench rebellion. 
But the firm wants the Chancellor to go further and perform a similar about-face on other measures it sees as anti-small business and a “body blow to entrepreneurs”.
Bishop Fleming managing partner Matthew Lee, pictured, pointed out that Mr Hammond said he would look to see how he could plug the £2bn hole from the NI U-Turn with new measures in his Autumn Budget.
“While I welcome the fact that unincorporated businesses will not have to pay more NI contributions, I remain very concerned about the extra tax to be collected from those who run their own companies,” he said.
“The announced £3,000 reduction in the dividend tax-free allowance from April 2018 is a body blow to entrepreneurs operating through a company.
“It means that business owners will be worse off by £225, £975 or £1,143, depending on whether they are basic rate, higher rate or additional rate taxpayers."
For a couple sharing the running of a company, the tax impact would be doubled to £450, £1,950 or even £2,286 depending on their tax rate.
Mr Lee added: “Business owners, whether they are operating through a company or not, should be supported and encouraged by this government, not punished, as they generate many of the jobs and wealth that the UK needs. The means not taxing them unfairly.”
The NI increase for the self-employed was the main bone of contention in a Spring Budget that was otherwise roundly dismissed as “underwhelming” by Bath business organisations.
Business West, which runs Bath Chamber of Commerce, warned there were some measures that will make firms nervous.
Managing director Phil Smith said: “This was an underwhelming Budget from the Chancellor, with limited eye-catching announcements and a lack of major changes for businesses to welcome.
“In some measure this was forced upon the Chancellor. With Brexit creating considerable uncertainty over the coming two years, it is not a time to spend freely. However, even the Chancellor’s limited wiggle room was smaller than expected – as the medium-term growth projections announced have deteriorated, despite a short-term boost to growth this year.”
Nonetheless, businesses would be disappointed with what was announced, he said.
On business rates, he said: “There has been some shift to ease the pain of business rates revaluation – with help targeted at growing, smaller businesses who are leaving behind small business rate tax relief, a populist handout to pubs and the creation of a fund to help local authorities ameliorate the worst cases.
“However, if you aren’t a pub or don’t qualify for smaller business rate relief, you’ll be left wondering what relief is available to the often-sharp increases in tax you will be expected to pay. Many businesses will continue to feel they are being unfairly squeezed by rate rises that do not reflect their ability to pay or their profitability.”
Business West welcomed the introduction of ‘T Levels’ to raise the status of technical and vocational qualifications, but said it must be backed by proper resources and reform if the aim of having a higher status to qualifications is borne out in their real-world perception by future employers.
“Overall this Budget gave the impression of steady as she goes, more in preparation for a possible rough sea ahead than in an expectation of finding vast new lands of undiscovered prosperity,” said Mr. Smith.
Jon Miles, director at Bath accountancy firm Richardson Swift, said after much lobbying on the timetable for Making Tax Digital (MTD), it was good that the Chancellor had listened “to a degree”.
He said: “Businesses with a turnover below the VAT threshold (£85,000) won’t have to start using the service until April 2019. This at least buys them more time, although they will not be exempt which would have been better. The original exemption from MTD for businesses with turnover under £10,000 still stands.”
He also welcomed the announcements on business rate relief.
“Of note, local pubs may benefit from the £1,000 discount announced on business rates if their ratable value is below £100,000. It would have been good if a similar discount was announced for other businesses though, particularly in the hospitality sector, which is a significant player in our area.”
He also questioned the decision to cut the tax-free £5,000 dividend allowance to £2,000 from April 2018 – a move he said signaled that it would eventually go completely.
“This is slightly frustrating, particularly for genuine business owners where the £5,000 would only have been a small proportion of their total income drawn from their company,” he said.
“While perhaps the impact per person is not massive, changing the rules so soon after the original announcement, perhaps unduly penalises business owners who genuinely take extra risk and need to operate through a company, particularly as the £5,000 allowance helped to slightly dampen the adverse impact of the general increase in dividend tax rates last year.”
Mr. Miles said Richardson Swift would have liked to see a package of measures to stimulate business angel investment. “The rules surrounding Enterprise Investment Scheme funding, for example, are unnecessarily restrictive and complicated for businesses looking to raise finance quickly. A relaxation of some of these rules would have helped,” he said.
Dominic Bourquin, partner at accountancy firm Monahans, which has offices in Bath, Chippenham and Trowbridge, also said the first word that came to mind over the Budget was ‘underwhelming’.
“Philip Hammond’s second budget – and his first and last Spring Budget, as he moves to a single annual autumn budget from hereon – didn’t do a lot to impress.
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