Monday, May 27, 2024

Thurrock Businesses React To Budget

In the last Budget speech before the country goes to the polls, the Federation of Small Businesses (FSB) welcomed help for small businesses but is disappointed that the Chancellor is proceeding with the proposed hike in National Insurance Contributions (NICs).

The FSB was pleased with the announcement to take 345,000 small businesses in England out of the business rates system. Business rates are the third highest outlay for small businesses and this proposal will come as a huge relief to small businesses on the high street. This measure comes after a concerted FSB campaign to help businesses and local communities.

The FSB has been critical of the banks and their lending criteria and looks forward to the introduction of the new credit adjudicator giving small businesses the opportunity to appeal against a decision by the bank to reject a loan application. More competition for the high street clearers has been a long time coming.

Many small businesses were very concerned about proposals to increase fuel duty in one fell swoop by three pence per litre. The proposal to phase in the increase will be of some help but the FSB remains concerned at the one penny per litre increase due next month.

The FSB worked very closely with the Glover Review on public procurement and the Chancellors announcement to direct more public sector contracts towards SMEs will be a boost that must be directed at the smallest of businesses, namely those micro-businesses employing less than 10 people.

Giving small businesses time to pay their tax bills has always been a wise move. The extra time businesses get on this aspect of their enterprise allows them to survive and grow. The extension to the scheme for the whole of the next Parliament is good news.

In 2008, the FSB called for and was successful in getting the Entrepreneurs Relief. This means that entrepreneurs making gains of up to £1 million will only face a Capital Gains Tax of 10 per cent as opposed to the general 18 per cent rate. Proposals to increase the threshold to £2 million should see serial entrepreneurship rise.

The FSB continued to express concern at the proposed increase in NICs. FSB research clearly shows that this come at a cost of 57,000 jobs to the economy.

Essex FSB Chairman Iain Wicks said,

“This Budget has provided welcome news on helping to improve small businesses cash-flow but the increase in the NICs will be bad for job creation.

“Small firms are key to furthering economic recovery as the UK’s largest employer and we are concerned that through continuing plans to increase employee National Insurance Contributions (NICs) and not introducing a NICs holiday to firms employing less than 50 staff who take on more employees, it will increase pressure on struggling firms meaning they will not be able to take on additional staff. FSB and CEBR research shows that the one per cent increase would cost 57,000 jobs in the UK. It is a tax on jobs which will do nothing to aid economic growth.

“Proposals to increase the Small Business Rate Relief threshold will be welcome news for those small firms in England whose cash-flow in hindered by big tax bills. A third of FSB members have said that business rates are the biggest taxation obstacle to growth and today’s announcement will go far to help firms, especially local shops and businesses.

“The FSB welcomes the Government’s commitment to get the bank’s lending to small businesses but feels the targets will have little impact if the banks do not begin to offer more affordable finance. An FSB-ICM survey of 10,000 members showed that a third (32%) had seen the cost of finance increase over the previous 12 months despite the Bank of England Base rate being at an all time low. The Government must now put pressure on the banks to lend affordable finance to small businesses so they can get on with the job in hand. The role of the new credit adjudicator will be key in this regard and the FSB looks forward to working with this new institution.”


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