Budget 2017: What do small businesses want?
If he wants to keep entrepreneurs happy, these are the key business measures the chancellor will need to address in this week's budget report...
With the chancellor of the exchequer, Philip Hammond, set to reveal the 2017 budget report this Wednesday 8 March, small business owners across the UK have their fingers crossed for the introduction of measures that would will help minimise obstacles to growth.
Amid rumours that Hammond is going to announce £500m funding to fill the UK skills gap, speculation surrounding upcoming business rate hikes, and a clamour for Brexit reassurance on the back of the EU referendum, we asked UK small business owners and start-up founders to share the policies on their ‘wish lists’.
From the expansion of SEIS funds to a full-blown reform of the tax system, here are 14 measures small business owners are keen to hear from Hammond…
1. Simplification of the tax system
Martin Campbell, managing director at Ormsby Street:
“The one thing that would make every small business owner’s life much easier is the simplification of our archaic tax system. We have many different kinds of national insurance, we have personal allowances that appear at a certain salary and disappear at another, we have some things that are allowable as an expense for corporation tax purposes but not for VAT purposes.
“If the chancellor could address this, he would make accounting much less of a headache for entrepreneurs and allow them to get on with running their business.”
Laura Carradice, owner of Flamingo Gifts, agrees and wants there to be a more level playing field between small businesses and large corporates:
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“As a small business, I feel that one of the most important things to address in the forthcoming budget would be the inequality between small and large businesses when it comes to taxes and employment.
“It would be marvellous if the chancellor would tackle the issue regarding large companies which make a profit in the UK but then offset the profit against losses from offshore companies to therefore avoid paying tax in the UK. This should, if at all possible, be stopped or curtailed to ensure that relevant taxes were paid by us all.”
2. Support for the gig economy
Ed Molyneux, co-founder and CEO at FreeAgent:
“Self-employed workers have none of the employment rights or the security that employed workers do and there must be some recognition for that […]. I would urge the chancellor to think again about these new IR35 reforms which could potentially have a devastating effect on contractors working in the public sector.”
Scott Philips, CEO at Rise Art:
“Small businesses rely on freelance workers. The government has been looking at increasing National Insurance Contribution (NIC) charges and other measures which will change this relationship. It would be good to have visibility on these initiatives and any changes.”
3. Corporation tax reform
Michelle Wright, founder and CEO at Cause4:
“Any entrepreneur would join me in saying they’d like to see the promised reduction of corporation tax, hopefully even less than the 17% that’s been proposed.”
Learn more about corporation tax with Startups’ free guide.
4. Steps to fill the skills gap
Paul Cant, vice president EMEA at BMC Software:
“The vast majority of businesses are urgently seeking to improve digital capabilities yet the skills crisis means there is a huge discrepancy between supply and demand. This problem cannot be solved overnight and requires a combined effort from industry and government to equip young people with the skills they need.
“By providing the next generation with a tailored career path in critical industries like engineering, IT and manufacturing, businesses will have access to a much deeper pool of technical talent which is critical for long-term economic growth.”
5. Improved digital infrastructure
William Newton, EMEA director at WiredScore:
“Many businesses in the UK still need faster, more reliable, more affordable internet to be able to grow. The cloud isn’t any use if you can’t access it. Indeed, nearly a third of British small to medium enterprises are still without access to super-fast broadband and 130,000 businesses across the country receive speeds below 10Mbps.
“Business connectivity could be improved on a more local level, by working closely with the new mayoral authorities and providing stakeholders in both the private and public sectors with resources such as the City of London’s Standard Wayleave Programme and Gigabit public WiFi.”
6. Focused Brexit strategy
Cat Gazzoli, founder and CEO at Piccolo:
“I would like to have greater clarity from the chancellor surrounding trade deals with EU and non-EU countries as we move towards Brexit. […] I would call for the UK government to help relax controls in emerging markets to encourage free trade, and less red tape on exports would help small and medium businesses to grow internationally.”
Chris McCullough, co-founder and CEO at RotaGeek:
“In the light of the Brexit vote, I’d like to see the chancellor take steps to not only reassure the businesses already based in the UK, but to proactively encourage inward investment. The UK faces an uncertain few years, and while the chancellor cannot necessarily offer stability, he has the opportunity to retain and attract business to the UK, positioning us optimally for an exit from the EU.”
7. Scrap the dividend tax system
Shaun Armstrong, managing director at Creditplus.co.uk:
“Scrap the new dividend tax system, as the 38% tax rate means an entrepreneur is paying tax at employed PAYE rates. Basically, there is less reward for all the extra risk. Allow tax reductions for employees and employers who wish to invest back into their company.”
8. R&D Tax Credits left untouched
Olly Culverhouse, CEO at Signable:
“My wish list starts with R&D Tax Credits – I’m keen on them remaining unchanged as it allows us to reinvest in our company in a tax efficient way.”
9. Business rates review
Jonathan Richards, CEO at breatheHR:
“The government hinted it would help those small businesses hit the hardest by the [business rates] hike with a £3.6bn fund. But this money is not enough for the millions of businesses that will be in need of it. The chancellor needs to set aside more cash for them in the upcoming budget and create a support system where small businesses can speak to experts who can advise them on how best to handle the hikes.”
Rob Lankey, CEO at the National Association of Commercial Finance Brokers (NACFB):
“Even if the chancellor does announce a ‘rob Peter to pay Paul’ solution […] – effectively reducing business rate cuts for superstores to subsidise small shops – there will inevitably still be winners and losers. Despite this, a clear and well-explained plan in the budget will help the high street to prepare for – and hopefully better absorb – the financial impact of these regulatory changes.”
James Layfield, founder of Central Working:
“A temporary exemption [from business rates] for new businesses would allow early-stage start-ups to find their feet, develop their IP or tech and give them a platform to build from, without burdening them with what is essentially a stealth tax.”
10. Digital tax clarification
“I would urge the government to use the forthcoming spring budget to provide more clarity about Making Tax Digital, so that freelancers and micro-business owners understand how they will be affected, when they will have to comply with the legislation and how they will be expected to submit their tax updates to HMRC.”
In January 1Tap Receipts revealed that 94% of business owners had not heard of Making Tax Digital. Learn more about Making Tax Digital here.
12. Expansion of SEIS funds
“[SEIS] tax relief does not apply to convertible loan notes, a bond that the holder may convert into equity or a return in cash. These loan notes, in principle, can be attractive to many small businesses and investors, yet because they are not covered by the (S)EIS schemes, they become far less attractive to investors.
“The (S)EIS relief only applies to individuals not investor groups or small funds. Yet, many investors work in small investment groups which spreads the risk and the workload of meeting, investigating and investing in small businesses. By expanding this tax relief to investment groups and small funds, the chancellor could improve access to mid-stage funding, a real problem for UK-based businesses.”
Take a look at our no-nonsense guide to SEIS funding.
13. Small business ‘tsar’ named
Dafydd Llewellyn, managing director at Concur:
“[Small businesses] are finally going to see a small business commissioner installed. […] Let’s have a name for the small business commissioner announced.”
14. Better support for global expansion
Lewis Reeves, founder and managing director at Viga:
“It’s never been a better time to export British business. However, with the cost of travel increasing and rising oil prices making that look like it’s set to continue, then subsidies on travel for smaller businesses would be very helpful. This represents a big cost for us and hence is a barrier to further global expansion.”
What business policies would you like to see addressed in the 2017 budget? Let us know in the comment box below or Tweet us @startupstowers