The Investor and Exporter Policy Team’s summary of the key national policy announcements from Spring Budget 2017 which are of relevance to exporters and investors.

State of the economy

• Last year, the British economy grew faster than the United States, faster than Japan, faster than France and amongst the major advanced economies Britain’s growth in 2016 was second only to Germany.
• We are building the foundations of a stronger, fairer, more global Britain.
• Building on the foundation of our economic strength, we are reaching out to seize the opportunities that lie ahead and making Britain the best place in the world to do business.

Taxation

• There is only one major fiscal event each year – this year that will be in the Autumn Budget.
• A strong economy needs a fair, stable and competitive tax system, creating the growth that will underpin our future prosperity. The ambition is for the UK to be the best place in the world to start and grow a business.
• From April this year corporation tax will fall to 19% the lowest rate in the G20, and in 2020 it will fall again to 17%.
• At Budget 2016, the Government announced reductions in business rates worth almost £9 billion over 5 years, including permanently doubling Small Business Rate Relief and extending the thresholds of the relief ensure that 600,000 businesses will not pay business rates again.
• The business rates revaluation takes effect in England from April 2017. In addition to the £3.6 billion transitional relief which was announced in November 2016, the government will provide £435 million of further support for businesses facing significant increases in bills from the English business rates system. This includes:

  • Support for small businesses losing Small Business Rate Relief to limit increases in their bills to the greater of £600 or the real terms transitional relief cap for small businesses each year;
  • Providing English local authorities with funding to support £300 million of discretionary relief, to allow them to provide support to individual hard cases in their local area.

• The government will also introduce a £1,000 business rate discount for public houses with a rateable value of up to £100,000, subject to state aid limits for businesses with multiple properties, for one year from 1 April 2017.
• Local government will be fully compensated for the loss of income as a result of these measures.
• At Budget 2016 the government announced an aim to deliver more frequent revaluations of properties – at least every 3 years. The government will set out its preferred approach for delivering this aim at Autumn Budget 2017 and will consult ahead of the next revaluation in 2022.
• Government will increase certainty and simplicity around R&D tax incentive claims and will work to improve awareness of incentives for business.
• The system of R&D tax incentives has been reviewed and the Government has determined that it remains effective and internationally competitive – it will remain under review to ensure that the UK is pro-innovation.
• The Government will continue to make progress on avoidance, evasion and compliance including new legislation to ensure firms cannot re-organise their business to avoid tax removing the ability for businesses to convert capital losses into trading losses from 8 March 2017. HMRC will also undertake a large business risk review by consulting on its process for risk profiling of large businesses and promoting stronger compliance.
• In order to encourage investment in the UK and make it easier for businesses to raise finance, the Government will:

  • Renew and extend the administrative simplifications of the Double Taxation Treaty Passport scheme to assist foreign lenders and UK borrowers. This scheme simplifies access to reduced withholding tax rates on interest that are available within the UK’s tax treaties with other countries;
  • Introduce an exemption from withholding tax for interest on debt traded on a Multilateral Trading Facility, removing a barrier to the development of UK debt markets. The Government will consult in spring 2017 on implementation of the exemption.

Access to Finance

• The Government will run a patient capital [another name for long-term capital] review to ensure that high-growth business can access the long-term capital needed. It will also consider existing tax reliefs aimed at encouraging investment and entrepreneurship to make sure that they are effective well targeted and provide value for money.
• Skills

• The introduction of the Apprenticeship Levy from April 2017 will support the delivery of three million apprenticeship starts by 2020.
• The Budget announced plans to demonstrate parity between technical and academic education through a series of funding reforms:

  • The development of new technical qualifications (T-levels) to sit alongside A-levels, which will include a three month work placement to be introduced from 2019/20 onwards;
  • Maintenance loans (as offered to University students) will be offered for technical education courses at Institutes of Technology and National Colleges.

• Lifelong learning will also be supported with £40 million over the next two years used to test different approaches for retraining and reskilling adults.
• New specialist maths schools will be created.
• The National Living Wage is increasing to £7.50 from April 2017.

National Productivity Infrastructure Fund

• As announced in the Autumn Statement 2016, The National Productivity Infrastructure Fund (NPIF) will provide for £23 billion of spending between 2017-18 and 2021-22. The 2017 Spring Budget confirmed:

  • £740 million in digital infrastructure, to support reliable broadband and mobile communications by 2020.
  • £16 million in the first phase of the Government’s 5G strategy.
  • £200 million to test ways to accelerate market delivery of new full fibre broadband networks.
  • Further support of the UK’s transport system: with £690 million for new local transport projects improving congestion on roads and public transport, and £220 million to improve congestion points on national roads - £90 million going to the North and £23 million to the Midlands.
  • There will continue to be a focus on science and innovation through the new £270 million Industrial Strategy Challenge Fund with the first challenges funded including electric vehicles, artificial intelligence and robotics.
  • Further support will be given for accessing skills:

    • £90 million specifically set aside to provide an additional 1,000 PhD places, 85% will be for subjects that align with the Industrial Strategy – Science, Technology, Engineering and Maths (STEM) disciplines, and 40% will strengthen collaboration between business and academia;
    • £210 million for fellowships and programs to attract global talent and researchers to maintain the UK as a world-leader in science and research.

Further information

The full budget statement can be accessed here. For more information on cross-cutting policy issues please refer to the Investor and Exporter Policy Team page on Connect or contact the relevant specialist:

• Taxation: Julian Christmas

Mobile: +44 (0)7880 054767 | Email: Julian.Christmas@trade.gsi.gov.uk

• Banking: Paul Webster

Mobile: +44 (0)7770 735531 | Email: Paul.Webster@trade.gsi.gov.uk

• Financial Modelling: Aster Thackery

Mobile: +44 (0)7471 021531 | Email: Aster.Thackery@trade.gsi.gov.uk

 

Planning and Infrastructure Consent: Peter Paddon

Mobile: +44 (0)7826 870870 | Email: Peter.Paddon@trade.gsi.gov.uk

• Skills: Gareth Preece

Mobile: +44 (0)7920 582677 | Email: Gareth.Preece@trade.gsi.gov.uk

• Migration and Visas: Caroline Wedmore

Tel: +44 (0)207 215 0358 | Email: Caroline.Wedmore@trade.gsi.gov.uk

• Science and Innovation: Sarah Tyrrell

Mobile: +44 (0)207 215 6457 | Email: Sarah.Tyrrell@trade.gsi.gov.uk