The headline announcements in the Autumn Statement failed to provide any real surprises for the UK’s burgeoning SME sector, and certainly no pleasant ones. Income tax, the National Living Wage and National Insurance changes have been some of this government’s favourite dials to turn over the last five years. The Autumn Statement announcements were a continuation of the government’s ongoing programme of gradual change in these areas.
The government’s lack of directional effort to support an industry that is growing really fast across the UK might reasonably be considered a cause for concern. There is a clear gap between what is needed and what is being provided. Direct investment via the British Business Bank has been announced at £400m. This may support a small number of growing tech firms, but unfortunately is unlikely to make a significant difference to the industry as a whole. With the investment not hitting the grass roots served by angel investors and seed funding, a handful of larger tech SMEs may collect an incremental round of funding, but the number it will help will be small.
Of far greater importance in terms of potential impact on SMEs is the effect of several less discussed changes that it could cynically be suggested the government tried to bury in the small print. A 2% increase on insurance premium tax will hit nano and micro SMEs. With insurance options being extremely limited, the market is already quasi-monopolised by a small handful of players and these announcements mean business insurance premiums are likely to rise.
Salary sacrifice for employee benefits is also being targeted – another blow to small companies trying to offer their employees something different to the big corporates. Salary sacrifice provides the SME with the possibility of offering the kind of perks and benefits that are typically unavailable in a larger firm. Without them, the SMEs task of attracting and retaining top talent becomes harder.
The drop in corporation tax to 17% is welcome news, although something that was announced some time ago. It will help business owners and investors to collect fatter dividend cheques, but will do little to drive the profit line itself. It will certainly attract more businesses to set up in the UK, and drive entrepreneurship, but is it enough?
Optimistic SMEs perhaps hoped for some real support and incentive to help them through uncertain economic times, but innovative measures to help the UK’s SMEs find a path through post-Brexit turmoil were conspicuous by their absence.