If you’ve seen that a new Budget is just around the corner and it doesn’t feel that long since the last one, then you’d be right – 2017 is the year of two Budgets. Following the final Spring Budget back in March, the first Autumn Budget is due on Wednesday 22 November. Here’s what you need to know.
A year of change
The UK has been the only major advanced economy in the world to make two major changes a year to its tax system, the Spring Budget and once in the Autumn Statement.
In response to calls from bodies such as the International Monetary Fund (IMF) and the Confederation of British Industry (CBI) to address the uncertainty created by this system, the Chancellor announced in 2016 that the UK would move to a single Budget held in the autumn, starting from 2018.
This means that both the final Spring Budget of the new system and the first Autumn Budget of the new system are being held in 2017, resulting in the unusual situation of the UK having two Budgets in one year!
Introducing the Spring Statement
From 2018 onwards, the Budget will be held in the autumn - but there will still be a fiscal event in the spring, called the Spring Statement. Unlike the previous Autumn Statement, this should simply be a response to the bi-annual forecast from the Office for Budget Responsibility and shouldn’t include any major changes to tax legislation.
However, the government has said it will “retain the option to make changes to fiscal policy at the Spring Statement if the economic circumstances require it”.
What does all this mean for small business owners?
We wait with interest to see what is announced, as the Budget will continue to include updates to tax legislation that might impact small businesses and freelancers. While the Spring Statement from 2018 onwards may prove less significant, it could still serve up news that has an impact on the self-employment sector.
Making Tax Digital, the government initiative for a digital tax system, is still huge news for small businesses and freelancers and we may even see an update in the Autumn Budget.
This article was written by Emily Coltman, Chief Accountant at FreeAgent, the online accounting software specifically designed for freelancers, contractors and micro-businesses, covering everything from invoicing to tax. Emily features in A Field Guide to Freelancer Finances, a free ebook of business finance tips – download your copy.