Confidence amongst UK small firms is ‘rebounding’, according to a survey carried out by the Federation of Small Businesses (FSB).
In the first quarter of 2018, the FSB’s Small Business Index (SBI), which monitors business confidence, stood at +6, up from -2.5 in the last quarter of 2017.
The SBI indicated that confidence amongst UK small businesses rose as a result of progress in regard to the government’s Brexit talks, and lower inflation levels.
32% of businesses surveyed believe that their performance will improve over the coming three months, whilst 40% predict that their performance will remain the same. 27% are ‘lacking in confidence’ in regard to the next quarter, the FSB found.
Meanwhile, 67% of firms reported that their revenues are either increasing or are stable, and 50% revealed that they plan to expand their business over the coming 12 months.
Commenting on the findings, Mike Cherry, National Chairman of the FSB, said: ‘After a 2017 dogged by spiralling prices and political uncertainty, it’s good to see small business confidence back in the black. The resilience of the small firms and self-employed entrepreneurs that make up 99% of UK businesses has lifted economic forecasts for the coming 12 months.’
The Treasury Committee has launched three reviews into the UK’s tax system and how it operates.
Tax avoidance and evasion, the VAT system, and the conduct of tax enquiries and the resolution of tax disputes will be analysed within the reviews, the Committee stated.
As part of the review into tax avoidance and evasion, the Treasury Committee will analyse what progress has been made in reducing the amount of tax lost to avoidance and offshore evasion.
Commenting on the issue of tax avoidance, a spokesperson for HMRC said: ‘Last year alone HMRC secured £8 billion in additional funding for our vital public services by intervening to make sure large businesses play by the rules.
‘In addition, since 2010 we have secured around £2.5 billion from tackling offshore tax dodgers. The UK’s tax gap is down to 6% – its lowest ever, and one of the lowest in the world.’
Meanwhile, the VAT review will examine the ‘root causes’ of the UK’s so-called ‘tax gap’, and will analyse the impact of Brexit on the UK’s VAT system.
Finally, the Treasury Committee will consider whether HMRC’s approach to conducting tax enquiries and resolving tax disputes meets the relevant standards.
Further information on the Committee’s reviews can be found on the Parliament website.
HMRC has recently launched a Making Tax Digital (MTD) pilot for income tax for self-employed taxpayers. This is currently open to sole traders with income from only one business, whose current accounting period ends after 5 April 2018.
To take part in the pilot, sole traders will need to send income and expenses summaries to HMRC every three months using MTD-compliant software. A final report to confirm all income and expenses for the year and to claim any allowances or relief the business may be entitled to will also be required.
Currently, only two software providers are included on the list of those that support the MTD for income tax pilot. This can be found on HMRC’s website – https://www.gov.uk/guidance/software-for-sending-income-tax-updates, and will be updated as more become available.
MTD for income tax is not set to take effect until 2020: the government has confirmed that keeping digital records and making quarterly updates will not be compulsory for taxes other than VAT before April 2020.
Meanwhile, the MTD for VAT pilot starts next month, before being mandated from April 2019.
A survey carried out by market research group BDRC has suggested that many UK small and medium-sized enterprises (SMEs) are choosing to fund their expansion and growth plans using their own finances.
The survey, which quizzed over 130,000 SMEs, revealed that UK businesses are ‘more likely to be self-reliant’ when it comes to sourcing finance for their expansion plans, with many self-funding via retained profits, trade credit and credit balances.
Of those firms who did seek to secure a loan during 2017, 41% were confident that a bank would lend to them, the survey revealed.
Some 38% of SMEs made use of external finance last year, with 31% using ‘core finance’, including loans, overdrafts and credit cards.
Commenting on the findings, Stephen Pegge, Director of Commercial Finance at UK Finance, said: ‘It is encouraging that increasing numbers of small firms are looking to use finance to grow their business in the year ahead.
‘However, most SMEs are still self-funding, with the vast majority not seeking any new external finance in the past year.’
Data published by the Office for National Statistics (ONS) has revealed that UK wage growth increased to 2.6% during the three months to January – representing the fastest rate of growth since September 2015.
Experts are debating as to whether the latest figures will incentivise the Monetary Policy Committee (MPC) to raise interest rates in May.
Commenting on the wage growth figures, the Resolution Foundation warned that average pay is ‘still lower than it was a decade ago’. Stephen Clarke, Senior Economic Analyst at the Resolution Foundation, said: ‘While it’s a relief that pay packets are no longer shrinking, the outlook for anaemic pay growth remains a huge living standards concern.’
The publication of the wage growth figures follows news that the UK’s rate of inflation fell from 3% to 2.7% during February. Lower prices for petrol played a key role in reducing the figure, the ONS said.
Mel Stride, Financial Secretary to the Treasury, said: ‘We know families feel the cost of living at the end of every working week.
‘We are increasing the National Living Wage, which is already helping the lowest earners see their pay rise by almost 7% above inflation.’
Data published by the Government Equalities Office has suggested that 77% of UK firms who have unveiled their gender pay gap figures pay male employees more than female employees.
New rules introduced from 6 April 2017 mean that large businesses are required by law to publish their gender pay gap figures on their website. Voluntary and private sector employers with 250 employees or more must publish their figures by 4 April 2018. Public sector employers must publish their figures by 30 March 2018.
The data found that around 14% of firms pay women more than men, and 8% have ‘no gender pay gap at all’.
The Government Equalities Office also revealed that more than 6,000 businesses are yet to publish their gender pay gap figures. Businesses who fail to report their figures before the deadline could face legal action, the government warned.
Commenting on the data, a Home Office spokesperson said: ‘This government is clear that tackling injustices like the gender pay gap is part of building a country that works for everyone. Shining a light on where women are being held back means employers can begin to take action.’
Business groups, including the Confederation of British Industry (CBI), the British Chambers of Commerce (BCC) and the Institute of Directors (IoD) have responded to the news that the government has agreed terms for the UK’s Brexit transitional period.
The government outlined that the transitional period will last from 29 March 2019, the day when the UK will officially leave the EU, until 31 December 2020. During this transition period, the UK will be permitted to sign its own trade deals, the government said.
Many business groups welcomed the news. Dr Adam Marshall, Director General of the BCC, said: ‘This is a milestone that many businesses across the UK have been waiting for. The agreement of a status quo transition period is great news for trading firms on both sides of the Channel, as it means that they will face little or no change in day-to-day business in the short-term.’
The CBI hailed the agreement as a ‘victory for common sense’. Carolyn Fairbairn, its Director General, commented: ‘Agreeing transition is a critical milestone that will provide many hundreds of businesses with the confidence to put their contingency planning on hold and keep investing in the UK.’
Whilst the IoD welcomed the news, it also warned the government that it needs to focus on the ‘finer details and practical implications’ associated with the transition. Allie Renison, Head of Europe and Trade Policy at the IoD, stated: ‘Many businesses will only be able to sufficiently plan and prepare for Brexit once the precise details of the future relationship are known, and any changes to domestic infrastructure, like customs, have been implemented.’