Autumn Statement 2014: What it means for small business
Following the chancellor George Osborne’s latest statement, Startups rounds up the key issues affecting businesses
After four years in parliament, today, chancellor of the exchequer George Osborne, presented his final Autumn Statement before the general election next year.
Acknowledging that the UK still needs to improve productivity, Osborne announced a number of business-focused changes from investment in infrastructure to building a northern powerhouse – but what does it mean in practice for small businesses?
Startups has summed up the key points below:
Billed by Osborne as being “at the heart of this Autumn Statement”, the chancellor’s northern powerhouse, which was announced six months ago, is being created to address our “unbalanced economy”.
With an ambition to “bring together our great cities of the north”, the report revealed an investment of over £7bn into transport, infrastructure and connectivity and Osborne is in discussion with Greater Manchester about introducing a metro mayor.
A number of science research centres were also announced, predominately in the north.
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The doubling of the Small Business Rate Relief will be extended until April 2016, resulting in 385,000 small businesses receiving 100% rate relief and 19% benefitting from some relief.
The government has also committed to a review of the future structure of business rates which will be reported in the Budget 2016 – an interim report on business rates administration will also be released in December 2015 to try to respond to business demand for less red tape and clearer billing.
The government has committed to seeing three million young people take up apprenticeships, having already reached two-thirds of that figure.
Osborne announced that the government will abolish National Insurance contributions for apprentices aged under-25 altogether, making it cheaper for small businesses and other employers to take them on. This measure is set to benefit employers of 500,000 apprentices.
Local Growth Fund
£1bn extra to add to the £12bn pot allocated to Local Enterprise Partnerships in 2013. The first round of Growth Deals, amounting to £6bn were announced earlier this year for 2015-16 and 2020-21.
Additionally, the report outlined plans to extend the enterprise zone in Nottingham to a site in Derby and will look at Croydon as the location for a Growth Zone.
Small Business Saturday and support for high-street businesses
After announcing a business rates discount of up to £1,000 for the retail sector in 2013’s Autumn Statement, the chancellor announced today that help for the high street will be increased to 1,500 next year. Pubs, cafes and restaurants with a value of under £50,000 are eligible, benefitting 300,000 properties.
Growth in exports has fallen short of expectations, with Osborne blaming economic weakness across European Union nations.
Today, he pledged to provide an additional £20m of support for first-time exporters. The package will include:
- A boost to the UKTI’s regional network of international trade advisers
- Tailored internet-based support for an additional 5,000 companies each year. UK Export Finance will provide help for companies seeking exporters’ working capital and access to export supply chains
- Funding to double the attendance of small and mid-sized businesses at international trade exhibitions. This will see 60,000 businesses attend UKTI’s global events programme
British Business Bank
The British Business Bank’s Enterprise Capital Funds programme will offer a further £400m (having already lent £1.45bn supporting 38,000 businesses, including 20,000 Start Up Loans recipients), to support venture capital, giving fast-growth small businesses greater access to finance.
Enterprise Finance Guarantee
Having already facilitated £2.9bn of lending to small businesses, the scheme will be given a boost to facilitate a further £500m of lending in 2015-16.
Funding for lending
Having played a crucial role in incentivising lending, it was announced that the Funding for Lending scheme will be extended by a further year until 29 January 2016, with a continued focus on lending to small businesses. In 2015, participants will be able to draw £5 of funding for every £1 of net lending to small businesses.
Although this wasn’t mentioned in the chancellor’s statement, a small business voucher scheme which helps cities such as Salford, Newcastle, York and Bradford to receive superfast broadband has been extended until March 2016 – with an aim to double the number of cities participating.
Over 5,000 businesses have already benefitted with connection times an average six times fater than before. It’s available on a first-come first-served basis.
Osborne provided welcome news for small businesses reliant on their vans, hauliers and fleet operators by pledging to freeze fuel duty, which has a direct impact on fuel prices. He added that fuel price surcharges will also come down. As an aside, 82% of the Federation of Small Businesses (FSB) members rely on cars, vans and motorcycles for their businesses.
Being deemed by many as the ‘Google tax’, the report announced action to tackle tax avoidance with Osborne stating that “big multi-nationals businesses and banks need to pay their fair share of tax”.
Businesses will be unable to gain tax advantages by transferring their businesses into a company they already have control of – and then claiming corporation tax deductions.
In addition, while banks have previously been able to eliminate tax on current profits, the government will now restrict the amount of profits that can be offset by previously carried-forward losses to 50%.