PHILIP Hammond won praise for what was seen as a solid Budget for small businesses even if it seemed short of measures that would provide significant help for firms in Scotland.

The Federation of Small Businesses said it broadly welcomed the measures announced in a speech that was free of nasty surprises.

“The last thing that Scottish small firms wanted was a Budget which pulled the rug from under them,” said Scottish policy convenor Andy Willox.

“The Chancellor’s solid plans will give many in business a little of the stability they crave.”

The Federation seemed especially relieved that Mr Hammond resisted the temptation to reduce the Value Added Tax threshold from £85,000. This is much higher than applies in many other countries.

Mark Houston, Glasgow office managing partner at Johnston Carmichael, noted there had been real fears Mr Hammond would cut the threshold in a way that meant many more small firms had to charge VAT. This could have left them losing sales while facing a hefty compliance burden.

He seemed unconcerned Mr Hammond said only the threshold would be maintained for two years, while the Treasury tries to find a way of easing the problems associated with having a ‘cliff edge’ cut-off.

Scottish Chambers of Commerce applauded the decision not to lower the VAT threshold and welcomed moves to encourage firms to invest in research and development.

These include an increase in the main R&D tax credit to 12 per cent from 11 per cent.

The scheme concerned applies mainly to large firms. Mr Houston noted it could benefit small businesses that are unable to claim relief under other measures because they have received grant funding deemed notifiable state aid.

Mr Houston said Mr Hammond’s decision to double the amount of funding ‘knowledge intensive’ companies can raise under the Enterprise Incentive Scheme to £2m could provide significant help for many early stage firms.

However, he noted the decision to increase the National Living Wage by 4.4 per cent in April, to £7.83 an hour, from £7.50, could pose challenges for many small firms. Any increase would impact the hospitality and leisure sectors disproportionately.

The Chancellor cancelled the fuel duty rise scheduled for April in a move that would be welcomed by many small firms, for which transport costs are a significant overhead.

He said a planned increase in duty rates for diesel cars that don’t meet the latest standards will not apply to other vehicles, declaring: “No white van man (or woman) will be hit by these measures.”

However, Mr Houston said while The Budget was pretty positive on balance it did not include anything dramatic.

He asked: “Is that as much as they could be doing for small businesses at the moment?”

Mr Houston suggested the Chancellor could have provided a much bigger boost to the sector by restoring the £500,000 limit for tax relief on spending on plant and equipment. Firms can claim £200,000 capital allowances currently.

Scottish Chambers of Commerce chief executive Liz Cameron highlighted the Chancellor’s decision to bring forward plans to limit increases in business rates to consumer price inflation, as opposed to the higher measure based on retail prices.

She said this increased the absolute necessity for Scotland to remain a competitive tax environment to attract investors and sustain businesses.

Control over business rates is devolved to Scotland.

Other measures proposed by the Chancellor to ease the business rates burden on small firms included extending the £1,000 discount for pubs with a rateable value of less than £100,000 by a year to March 2019.

Finance Secretary Derek Mackay was forced to introduce £45m of emergency reliefs for the hospitality sector and the north-east in August after the first adjustment in non-domestic rates since 2010 sparked widespread protest. It left some businesses facing rises of up to 400 per cent.