Many SMEs will probably view the Autumn Statement positively. The chancellor spoke about encouraging growth through ‘supply side reforms’ and the cuts to national insurance and changes to incentivise R&D spend are all positive steps. There were also sector specific measures that will be welcomed by those affected, such as reducing regulation and the planning back log for house-builders.
However, whilst the chancellor started talking about growth, there were measures that he could have taken which he chose not to. For example, what wasn’t included was changes to the VAT registration threshold which creates a ‘cliff edge’ for those SMEs trading close to the £85k registration limit and is ultimately a barrier to growth. Also missing were any measures to counter ‘fiscal drag’. Freezing tax rates combined with high inflation has resulted in more SMEs paying more tax, but also brings greater tax administration requirements, as many tax rules or reliefs are turnover based. Many SMEs are not equipped to deal with tax rules aimed at larger organisations, which creates the risk of tax errors, penalties, and time spent on administration rather than growing their businesses.
Overall, the Autumn Statement suggests some ‘green shoots’ for SMEs. I suspect he was pandering to the ‘white van man’, the small, self-sufficient entrepreneurial businessman who is the backbone of the economy and probably feels politically disenfranchised. The tax cuts will be welcomed but ultimately may not be viewed so much as a springboard for growth as a series of smaller tax rises over a longer period.
Many SMEs will probably view the Autumn Statement positively. The chancellor spoke about encouraging growth through ‘supply side reforms’ and the cuts to national insurance and changes to incentivise R&D spend are all positive steps. There were also sector specific measures that will be welcomed by those affected, such as reducing regulation and the planning back log for house-builders.
However, whilst the chancellor started talking about growth, there were measures that he could have taken which he chose not to. For example, what wasn’t included was changes to the VAT registration threshold which creates a ‘cliff edge’ for those SMEs trading close to the £85k registration limit and is ultimately a barrier to growth. Also missing were any measures to counter ‘fiscal drag’. Freezing tax rates combined with high inflation has resulted in more SMEs paying more tax, but also brings greater tax administration requirements, as many tax rules or reliefs are turnover based. Many SMEs are not equipped to deal with tax rules aimed at larger organisations, which creates the risk of tax errors, penalties, and time spent on administration rather than growing their businesses.
Overall, the Autumn Statement suggests some ‘green shoots’ for SMEs. I suspect he was pandering to the ‘white van man’, the small, self-sufficient entrepreneurial businessman who is the backbone of the economy and probably feels politically disenfranchised. The tax cuts will be welcomed but ultimately may not be viewed so much as a springboard for growth as a series of smaller tax rises over a longer period.
