13 March 2018
The Chancellor, Philip Hammond, has presented his first-ever Spring Statement to Parliament today. From last year, the government said that major tax or spending changes will be made just once a year at the Budget, presented in the autumn. The spring statement gives an update on the health of the economy, progress on Budget issues and invites views on changes the government is considering, one of those being VAT.
On VAT, the Chancellor is launching a consultation to get views on how to ease the VAT burden for small businesses once they reach the £85,000 threshold. At present, if their turnover goes over £85,000 by just £1, then businesses are liable to 20% VAT on the full amount. Avoiding a whopping tax bill of £17,000 gives salon and barbershop owners a good reason not to continue developing their successful business or to artificially stunt growth.
Hilary Hall, NHBF chief executive, says:
“The NHBF has been campaigning hard for government action on VAT. We have been calling for tiered rates which would introduce VAT in smaller steps, removing this ‘cliff edge’ once a salon or barbershop reaches the VAT threshold. We would like to see the government go further, for example reducing the rate of VAT for hairdressing, similar to other European countries.”
In the autumn Budget, the government confirmed its intention for revaluations to be done every 5 years instead of every 3 years. In the Spring Statement it has brought forward the next property revaluation for business rates by one year, from 2022 to 2021.
Hilary added:
“This means that rates bills will be a more accurate reflection of current property values, which is especially important in locations where property prices are going down.”
For a summary of the key points of the Spring Statement visit the GOV.UK website.