The Federation of Small Businesses has written to chancellor of the exchequer Rishi Sunak ahead of what it calls a "turning point" Spring Statement next week, urging him to provide more support for UK small businesses.
The Federation of Small Businesses (FSB) has submitted a costed Spring Statement calling for a range of measures to support small firms and ease their tax burden. In his letter to Rishi Sunak, FSB national chair Martin McTague has recommended interventions aimed at addressing "foundational issues" in the UK economy against a backdrop of declining business confidence.
He has asked the chancellor to move away from an "eye-wateringly expensive" tax break for big corporates so that he can provide more support for SMEs. FSB research shows that just 4% of the small businesses that make up 99% of the private sector see the super deduction tax break as one of the top three incentives to invest.
Last month, the chancellor promised to create "a new culture of enterprise" in the annual Mais lecture, and stated that he "firmly believe[s] in lower taxes". However, the chancellor is currently set to confirm an £18bn collective annual increase in national insurance contributions (NICs) and dividend taxation at his Spring Statement next week. There is also speculation that the Treasury may scrap the R&D tax credit incentive for small research-intensive businesses in favour of supporting larger companies.
The FSB recommendations include:
- Increasing the Employment Allowance to £5,000;
- Increasing the rateable value ceiling for small business rates relief to £25,000, and extending a one-year relief on business rates increases linked to property investments in plant and machinery - potentially taking an extra 200,000 small businesses out of the business rates system;
- Extending support with energy costs for small businesses;
- Delivering on pledges to end the UK's poor payment culture by making Audit Committees directly responsible for ensuring best practice within supply chains;
- Widening eligibility for the Help To Grow Digital and Management initiatives to the 750,000 small firms currently excluded from them;
- Simplifying the R&D tax credit system to make it more accessible for small businesses without having to use paid intermediaries.
The FSB is also encouraging the government to build on the success of the Refugee Entrepreneurship Pilot Programme. Existing research shows that migrants seeking asylum are considerably more likely to start an enterprise than other groups.
The FSB letter follows publication of the latest ONS Business Insights study, which finds that 5% of business owners "have low or no confidence of surviving the next three months". The latest BEIS statistics show that there are 5.6 million firms across the UK, indicating 280,000 are at imminent risk of collapse. A quarter (25%) of enterprises in the accommodation and food services sector are still not fully trading, according to the ONS; and the majority of firms are concerned about performance over the coming month.
Martin McTague said: "When we look back at this tumultuous period, next week's Spring Statement will, for better or worse, be seen as a turning point. The chancellor has a choice: plough on with damaging tax hikes, or take steps to protect the most fragile and empower small firms to deliver his 'culture of enterprise' vision.
"The time to deliver a low tax, high investment, dynamic economy is now, not later in the political cycle. The chancellor cannot control the wholesale price of gas and oil, but he can control tax policy."
Written by Rachel Miller.