Budget predictions: What do businesses want from the 2014 Budget?
Entrepreneurs and industry experts discuss the key policies they hope to see Osborne address in this year’s Budget Report…
Ahead of the chancellor of the exchequer’s 2014 Budget Report this week, small business owners and industry experts share the key policy announcements they want from Osborne in order to support the UK’s small business landscape.
Small business tax relief
Rupert Lee-Browne, founder & CEO of currency exchange business Caxton FX, would like to see the introduction of tax incentives that encourage entrepreneurs to grow their business rather than pursue a quick exit.
He said: “I am calling for more favourable tax treatment of dividends for founder shareholders that should be given once a company has been running for several years. This will support UK entrepreneurs in their campaign for growth and inspire them to continue building their businesses, in turn generating further wealth and job creation for the nation.”
Founder and co-CEO of co-working provider The Office Group, Olly Olsen, also believes tax incentives for start-ups are crucial but believes government should go further and provide tax exemptions for new businesses:
“Current corporation tax cuts have helped larger businesses but have neglected the 1.5 million smaller companies that have the potential for growth. In the first few years of their existence, when money is tight, there should be an exemption from tax for start-ups.
“It is small businesses that will create jobs and entrepreneurs should be encouraged through potential relief. If the tax burden is decreased then the additional funds could be invested into expansion and the creation of new jobs.”
Similarly, tax relief is of central focus to Drew Thomson’s, CEO of social playlist Starcount, Budget wish-list: “I’d like to see Osborne bring in more dynamic tax relief for entrepreneurs; tax relief tied not to the company’s value but the number of jobs it creates.
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“It’s also worth pointing out that, as tax incentives stand, small business owners are being actively incentivised to hold onto their equity. What the tax code should be doing is encouraging entrepreneurs to share equity with employees.”
Encouraging overseas exports
The co-founder of peer-to-peer currency exchange platform Kantox, Philippe Gelis, argues that the government needs to do more to encourage British businesses to sell overseas but says “ludicrous” bank fees are restricting exports:
“The government has set ambitious targets for exports by 2020, but […] its export targets will only be within the grasp of small businesses if Osborne addresses the foreign exchange battle facing small businesses in the upcoming Budget.”
Lee-Browne agrees: “I would like to see the chancellor reduce the complications in export licensing and encourage alternative sources of finance to help fund exporters, such as offering favourable credit terms to overseas buyers of UK goods and services. This would go a long way to making them more attractive to potential exporters.”
Fuel duty tax
In December’s Autumn Statement, Osborne announced that the planned fuel duty increase had been scrapped and that a fuel duty freeze would continue. Phil Orford MBE, chief executive of the Forum of Private Business, predicts that there will be further measures announced to tackle fuel duty in the Budget but emphasises that “there needs to be a more thorough review”.
Orford: “The principle of having to pay VAT on a fuel duty tax at the fuel pump is fundamentally unfair and raises the average litre cost by more than 10p. We would welcome the government looking at phasing that out.”
Financial support for small and medium-sized businesses
Always a key talking point around the annual Budget Report, Vince McLoughlin, partner at advisory firm Russell New, feels there needs to be increased access to funding for small businesses in order to support economic growth.
He argues that the Funding for Lending Scheme should be government’s primary focus: “Improvements must be made to the Funding for Lending Scheme and we should see a commitment to a permanent increase in the Annual Investment Allowance (AIA), which allows businesses to claim capital allowances on certain purchases or investments in their business.
“The temporary limit of £250,000 ends in December. If we don’t see another increase in the Budget, then now is the time for all businesses to maximise the opportunities to use their AIA by planning the timing of their capital expenditure across the rest of this year.”
Government support with late invoice payments would also go some way to helping small businesses remain buoyant as the director of business consultancy Spring Partnerships, Stephen Archer, commented:
“The government needs to tighten penalties and ease of achieving redress against the perpetrators of [late payments] such as enforcing tax penalties. The EU late payment directive of 30-day payment terms needs to be mandatory.”