Budget Impact On SMEs - Sage Comment
Lee Perkins, Managing Director, Sage's Small Business Division "The Chancellor introduced his Budget as one which "unashamedly backed business" and through cuts to Corporation Tax, simplifying the tax system for small businesses and providing increased support for start-ups and enterprise, the Government's rhetoric was justified."
"Commitments to developing world-beating broadband and making Britain Europe's technology centre makes the UK an incredibly attractive place to set-up and do business and will support sustained long-term growth that gives small businesses the confidence to expand."
"We wanted a pro-business budget. We needed a pro-business budget. What we've got is a series of measures that should see the small business "engine room" of our economy shift up a gear, providing the Government delivers on its announcements."
FSB Budget Reaction: Welcome Measures But Still A Missing Link
The Federation of Small Businesses (FSB) has welcomed the Chancellor's Budget speech. Commenting on the speech, John Walker, National Chairman, Federation of Small Businesses, said: "We asked for a Budget with long-term measures to help to instil confidence, rather than a barrage of micro-measures that have a limited impact on the ground. We are pleased with some of the actions to cut the burden of red tape, help to get our young workers into employment, and measures to improve access to finance. Especially welcome are the proposals to simplify the tax system for the country's smallest companies. However, petrol prices remain a major concern for small businesses and we would have liked some further action on reducing the level of fuel duty to help struggling small firms.
"The key to nurturing the economy back to full health is by tackling the budget deficit and the FSB continues to support the Government's debt reduction plan. The FSB welcomes the fiscally neutral budget and is pleased with the OBR's positive revision to growth forecasts this year, along with forecasts for falling inflation.
"But, to ensure that businesses can be properly supported and to bring together the measures that have been announced, we are disappointed that there were no plans to look into setting up a Small Business Administration - a department to champion small firms at the heart of Government with a cabinet level minister. This is the missing link to ensuring that all initiatives have the maximum impact for small firms."
Commenting on tax simplification plans John Walker, National Chairman, Federation of Small Businesses, said: "Plans to move to a simpler 'cash accounts' system will bring huge deregulatory benefits to small businesses, and is something the FSB has long been calling for. Many small firms will already use a 'cash accounting' system and so the moves to allow businesses with a turnover of less than £77,000 to use this system will be welcome. Research by the FSB for the Office of Tax Simplification found that on average 50 per cent of small firms spend between two and eight hours understanding, calculating and completing tax returns. This system will make it easier for those businesses. What we need to see now is HMRC develop a better relationship with business to ensure tax compliance. "
Fuel duty:
"We are disappointed the Chancellor has not announced a cut in the level of fuel duty and that the rise deferred to August is still to go ahead. This will still hit small businesses and households hard and so we need to see a long term solution to address high and volatile fuel prices. We remain concerned that the Government's Fair Fuel Stabiliser will not trigger an actual reduction in the price paid at the pumps."
On non-bank finance:
"With two in five small businesses still struggling to access finance through the banks it is vital for growth that there are alternatives they can go to. So the £1.1 billion Business Finance Partnership is welcome as it will open up non-bank lending for businesses. The further extension to the Enterprise Finance Guarantee will also be beneficial to small firms and the expansion of UK Export Finance will benefit businesses that want to export."
"Further to the publication of the Breedon report into alternative sources of finance last week, we hope that the Government will accept its recommendations into non-bank lending. Notably that it will look to put all its financial products under one umbrella organisation. This is a good first step to creating the Small Business Administration that we have been calling for.
Enterprise loans
"The announcement that the Chancellor will look at introducing Enterprise Loans for young people to start their own businesses is very welcome. More than three-quarters of 11-18 year olds would like to set up their own business so loans to help them do so will be a great help. The FSB has long said that Government should prioritise and support enterprise to young people in education so that setting up on their own is an option."
Broadband:
"The raised aspirations for broadband development to make 10 cities in Britain super connected are welcome, but we must not forget about rural Britain where a lot of small businesses are based. Digital services in some parts of rural Britain are still wholly inadequate, and that is where efforts should be focused to avoid a digital divide."
Infrastructure:
"We are pleased with the Government's renewed focus on the UK's road network. The poor state of roads costs small businesses £5,000 a year due to congestion and poor maintenance. However, it must be remembered that putting a cost on roads is yet another overhead for small firms, which could be damaging at a time when the price of fuel is having a negative effect on businesses.
"It is important that any money collected through tolls is used solely to fund the road infrastructure network. Many would argue that the water crisis in the south and the impending energy crisis show the limitations of the private sector in achieving a long term vision. We do not want to see this repeated on Britain's road network that is so vital to small businesses."
Karen Barrett, Chief Executive Of unbiased.co.uk, Comments On The Budget
Personal taxation
"The Chancellor's announcement to raise the personal allowance from £8,100 to £9,205 from April 2013 is a welcome pledge for everyone, particularly those on lower incomes. Whilst there are already plans to increase this allowance - the income that you can receive before you start paying any income tax - to £10,000 by April 2015, today's announcement will help fast track to the £10,000 goal. The further plan to provide people with an annual statement detailing where their tax payments are being used is a welcome move for consumers both in terms of educating them and providing them with some perspective on tax. The announcements made today will go some way to help basic rate taxpayers by giving them some extra money in their pocket. According to our research at the end of last year, 72% of Brits were concerned about their finances, so with this in mind we would urge consumers to seek advice from an independent financial adviser (IFA) to help them make the most of their money.
Changes to child benefit:
"From April 2013 child benefit was due to be abolished for those households with one parent earning more than £42,475. However, the new threshold limit changes announced today by the Chancellor will help families with one parent in employment and earning just over the threshold who would have lost this benefit under previous plans. The introduction of the gradual phase out of child benefit for those earning over £50,000 will also go some way to helping families cope. People often miss out on significant amounts by failing to claim the child tax credit and child benefits due to them. Our latest Tax Action report finds that consumers waste an estimated £401million by not making efficient use of these allowances. We encourage people to review their current situation today to ensure they aren't missing out on what is rightfully theirs. A discussion with an independent financial adviser is a great way to start this process, and you can carry out a free and confidential search at www.unbiased.co.uk.
Simplification of state pensions
"The announcement to simplify basic state pensions is a welcome move for everyone as is the new single tier pension rate set at £140, based on contributions. The simplification is a step in the right direction in helping educate consumers on their pension contributions. Our latest stats reveal the majority of Brits (65%) continue to expect the state pension to provide them with an income in retirement and only 4% expect NEST to form part of their pension income. The start of auto-enrolment will also mark an important change in how we save for our retirement in this country. For the first time, almost the entire working population will automatically be part of a retirement saving scheme, with their employers making an active contribution to that scheme. We would encourage people to use the forthcoming auto-enrolment launch as a reason to think about their retirement options and to consult an independent financial adviser (IFA) to ensure they are making the right choices for themselves.
Help for small businesses:
"With the Chancellor announcing expansion on Enterprise Finance guarantees for small businesses, and corporation tax falling to 24% from 1 April 2012, there is more need than ever for small businesses to seek advice from an accountant or an independent financial adviser. In addition, the credit-easing programme the Chancellor announced yesterday will see £20 billion made available to small businesses over the next two years, marking further good news for small businesses. An accountant or IFA will ensure that small businesses make the most of their tax allowances and assist them in keeping up to speed on the impact of changes to current tax rules. Our recent research tells us there are currently over three in five small business owners using a professional adviser, such as an accountant or an IFA for their business and it is these professionals who can really make a difference to the amount of tax a business pays. With further reductions of 1 per cent per annum in corporation tax expected over the next two years, falling to 23 per cent, the future may be starting to look better for SMEs."
Response To Budget And Relaxation Of Sunday Trading Laws
Retailers could stand to increase sales by £220m thanks to the relaxation in Sunday trading laws during the Olympics, according to Verdict Research estimates.
The temporary change to the law announced in today's Budget will enable longer shopping hours and more opportunity for consumers to spend across eight consecutive Sundays. This will be particularly beneficial during the Olympic period when tourism levels will be high and it will enable increased spending from visitors that are only in the UK for a short time and who would have had their spending opportunities restricted.
While for retailers the costs of opening will have to be weighed up against any anticipated sales boost, some retailers already open their stores for browsing only, over and above the six hours they are limited to selling in, and these will already be staffed so the option of actually selling during that time will no doubt be beneficial. However, in some lower footfall locations it may not be profitable but at least the retailers will have the option to choose.
Smaller retailers that are not currently restricted will be hit though, as they will have to compete with larger retailers throughout the day's trading.
The increasing of the personal tax allowance, also announced in the budget today, will be welcomed by retailers whose customers' disposable incomes are under pressure. However, with fuel inflation still high and no changes to the planned 3p increase in fuel duty in August, consumers' wallets will still be feeling the pinch. Many retailers will be disappointed to see that there is no help in terms of business rates, or a reduction in VAT.
The Budget & Tax Issues By David Pegler, Divisional Director of Brewin Dolphin Brighton
The good news for people and businesses in Sussex is that all the main tax reliefs have been left untouched - so pensions and ISAs continue to be the important investment vehicles they are today. Uncapped tax reliefs generally used in aggressive tax avoidance schemes - that is except charitable giving - will be capped from 2013 at £50,000 or 25% of earned income, whichever the greater.
Brewin Dolphin, with offices in Invicta House, Trafalgar Place, Brighton welcomed the Government's investment and incentives for private sector investment in key industries such as oil, pharmaceuticals and technology that were announced - an especially good Budget for the regions - we expect these to go some way to rebalancing the economy both by sector and geographically.
The cut in corporation tax will benefit those companies with significant exposure to the UK. We expect earnings estimates for the mid-cap companies, which are not as globally diversified as their larger peers, to improve on the bottom line. Overall, a budget that is positive for business, positive for the regions and so should be supportive of equity markets. The gilt market has strengthened although this probably reflects the weakening of Spanish and Italian government bonds, rather than anything which was announced in Westminster today.
If you would like to know more about the Budget and your Investment opportunities , please contact David Pegler at Brewin Dolphin on 0845 213 1190 or email info@brewin.co.uk
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