What the Autumn Budget Means for International Business
In his 2018 Autumn Budget speech, the Chancellor Philip Hammond unveiled a number of measures that could have an impact on international business expansion.
Hammond was careful to position his budget as a seemingly business friendly one. He avoided major increases to business tax to fund the government’s spending priorities – likely an incentive to give companies a renewed confidence to invest and grow.
One of the most notable announcements included in the budget was a new 'Digital Services Tax', following criticisms that a small number of large international companies have paid only small amounts of tax on their UK profits. It will require some digital businesses to pay tax on their sales generated in the UK from April
2020, and will target 'established technology giants', rather than tech start-ups.
Experts are advising that the government ensures there are tight classifications of which businesses will fall under these new rules, in order to avoid unwanted consequences and disincentives for the whole industry.
For any global business, a strong internet infrastructure is now crucial to ensure communication throughout the world – and many will be glad that the chancellor announced investment in rural broadband. For any businesses operating from rural areas, unreliable internet can cost businesses significantly. Experts have advised the
government to ensure there are adequate levels of funding put into improving rural internet infrastructure, and that it is targeted in the right places. Hammond also expressed hopes to boost productivity by rolling out full fibre broadband nationwide.
And for businesses who rely on UK roads to get into work, meet clients or receive deliveries, Hammond announced the largest ever investment package for the UK’s road infrastructure, with just under £30 billion set aside to upgrade the UK’s roads, as well as fix and upgrade existing routes.
The budget also included measures to open e-passport gates to citizens from the US, Canada, Australia, New Zealand and Japan, which will help reduce queues and waiting times for overseas visitors – a small but notable benefit for businesses who are required to regularly send staff overseas and move them across international borders.
However, the budget failed to provide further clarity or support for UK exporters or importers who are concerned about Brexit. Prior to the Chancellor’s speech, the CBI had called for an advice line to be set up for SMEs concerned about the impact of Brexit on their business, but the Chancellor missed this opportunity to assuage the
fears of small businesses. This uncertainty was exacerbated by mixed messages coming from the government – prior to his speech, the Chancellor suggested that a no-deal Brexit would require an emergency budget, before Number 10 contradicted him by insisting that all spending commitments would be met, regardless of the outcome of Brexit negotiations.
Instead, there was a lot of emphasis on saving the British high street, which has seen poor performance lead to in recent years. Hammond announced £900 million in business rates relief for nearly 500,000 small businesses, which will form part of a wider investment to support high street retailers and increase footfall. For international businesses in the retail sector – this support could have a significant impact on revenue.
If you’re looking at expanding your business abroad and want to learn more about how the latest budget will affect you, or would like advice and support in any other area of your global growth, get in touch with Galvin International today.
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