FSB: What we need to see in this week’s Budget

With just a few days to go until Chancellor Jeremy Hunt delivers his Spring Budget, Federation of Small Businesses National Chair, Martin McTague, said: “The Chancellor must show the country he can take practical and credible steps to improve the environment for everyone who runs, works in, or uses small firms across the UK.

“We know that in times of recession, the more money small firms have to work with, the more chance the economy has of not only recovering but recovering quickly. This Budget needs to be about cutting the taxes that hold small firms back the most, which in turn will incentivise growth and job creation. As we steer away from the recession, it’s the only way for us to revive our sluggish economy.

“However, our research shows that small firms have been struggling for a lot longer than we’ve been in a recession for. Small business confidence has dipped below zero for seven consecutive quarters, hit hard by rising energy costs and the cost of doing business.

“Cutting the tax on jobs by raising the Employment Allowance from £5,000 to £6,500 to align it with the increase in the National Living Wage, would be a smart move. Small firms are having to wrestle with decisions about the future of their teams, and we need to make it easier for them to focus on growth.

“Similarly, the £85,000 VAT threshold acts as a straitjacket to firms eager to expand, because they end up tiptoeing around it to avoid extra costs. Raising it to £100,000 could pull many away from that edge.

“Other measures include bringing in tax-free shopping to motivate tourists to spend more in our shops and restaurants. This not only strengthens the supply chain, it also leads to increased revenue for the Treasury.

“Elsewhere, small businesses are shackled by financial burdens – devoting 52 hours each year to tax compliance, coupled with £4,100 on expenses like software or accountants. These deplete resources and stifle productivity, so we’d like to see HMRC set a target to reduce business compliance costs.

SME Publications/ SME XPO 2024

“We’d also like a fresh look at access to finance and the Recovery Loan Scheme expanded, with banks protected from incoming impacts that would harm their ability to lend to small firms.

“Entrepreneurs need to be incentivised to grow their businesses, and so the self-employed need to be given the same consideration when it comes to personal tax cuts. Time is of the essence here, and the Chancellor should not pass up on the chance to bring in policies to improve cashflow. Any incentive to grow in these trying times should be at the forefront of priorities. It’s time to leave this period of economic downturn behind us.”

SME Publications/ SME XPO 2024