The Federation of Small Businesses (FSB) has urged Chancellor Philip Hammond to use the upcoming Spring Statement to ‘help small firms’.
According to the FSB’s latest Small Business Index (SBI), confidence amongst small firms ‘remained negative’ in the first quarter of 2019, at -5.0. This represents the third consecutive negative reading. Mike Cherry, National Chairman of the FSB, stated that the SBI reading ‘must serve as a wake-up call for the Treasury’.
The business group has called for the government to use the Spring Statement to help reverse the slump in business optimism.
Mr Cherry commented: ‘Even in the wake of the crash, when the economy was well and truly on the ropes, we didn’t see negativity take hold like it has now.
‘Small firms still have no idea what regulatory framework they’ll be working to in three-and-a-half weeks’ time. Not only does the political stalemate surrounding Brexit make it impossible to plan, it has also distracted from the domestic policy agenda. Next week is the Chancellor’s chance to change this.’
The FSB is urging the Chancellor to tackle the UK’s ‘late payment crisis’, and to commit to a one-year ‘safe harbour’ approach to Making Tax Digital (MTD) fines. The initiative will come into effect from 1 April 2019.
The Chancellor is set to deliver the Spring Statement on Wednesday 13 March.
In a new report, economic think tank the Institute for Fiscal Studies (IFS) has suggested that Chancellor Philip Hammond will be required to spend ‘billions more’ in order to end austerity.
The report suggested that spending increases promised by the Chancellor could be absorbed by a commitment to fund international aid, the UK’s defence sector and the NHS.
According to the IFS, some departments have already experienced ‘especially big cuts’ since 2010, meaning that it may prove to be difficult for the government to make any further savings.
Commenting on the report, Ben Zaranko, Research Economist at the IFS, said: ‘The Chancellor needs to decide what period the next Spending Review should cover, and what funding to make available to it.
‘The government has already committed to increase day-to-day NHS spending by £20 billion over the next five years. Even though the latest plans have overall day-to-day spending increasing over that time, these increases wouldn’t be enough even to cover the NHS commitment in full.
‘This suggests yet more years of austerity for many public services.’
The IFS also suggested that if the UK leaves the EU without a Brexit deal, the UK economy would struggle to grow, potentially leading to lower spending or higher taxes in the medium term.
Chancellor Philip Hammond delivered his 2018 Autumn Budget speech yesterday, outlining a range of tax and financial measures.
Mr Hammond’s speech unveiled a raft of amendments, including a bringing forward of the planned increase in the income tax personal allowance, which will rise to £12,500 in April 2019; an increase in the higher rate income tax threshold, which will rise to £50,000 at the same time; and a two-year cut in business rates for small retail firms in England from April 2019.
Further details regarding the announcements made by the Chancellor featured in the official press releases. Our comprehensive Budget Summary outlines the key measures, including some of the less-publicised changes that may impact upon your business or personal finances.
For a detailed overview of the Autumn Budget information, please read our 2018 Autumn Budget Summary.
Chancellor Philip Hammond has announced that he will deliver the Autumn Budget on Monday 29 October.
The 2018 Autumn Budget will be the final Budget before the UK leaves the EU in March 2019.
The Chancellor will deliver this year’s Budget earlier than usual, in a bid to avoid important final Brexit negotiations and a special European Council meeting, set to convene in November.
A Monday delivery of this year’s Budget breaks away from tradition – typically, Budgets are held on a Wednesday, after Prime Minister’s Questions.
In a statement, the Treasury said that this year’s Budget will build on announcements made in the Spring Statement and the 2017 Budget in order to help build a ‘stronger, more prosperous economy’.
The 2018 Autumn Budget will be the second of its kind under the government’s new fiscal timetable: in 2016, the Chancellor moved the annual Budget from the Spring to the Autumn, abolishing the Autumn Statement and replacing it with the Spring Statement.
We will be covering all of the key Budget announcements on our website.
The Treasury Committee has expressed concerns in regard to the impact of the UK’s current business rates system on firms.
In a letter to Chancellor Philip Hammond, Nicky Morgan, the Chair of the Committee, stated that business rates place a ‘financial burden’ on UK businesses, and questioned whether the system is ‘fit for purpose’.
‘It’s clear that many bricks and mortar stores are struggling to remain competitive against online retailers, with the Chancellor admitting that business rates can represent a high fixed cost for some businesses,’ said Mrs Morgan.
‘We are likely to scrutinise business rates further as part of our Autumn Budget inquiry later this year.’
In response to the Treasury Committee’s letter, the Chancellor ruled out reforming the business rates system, but did admit that the tax has ‘hit the high street too hard’.
Mr Hammond also stated that the government ‘needs to find a better way of taxing the digital economy’, and that it has been ‘making progress’ in regard to this.
In a letter to Chancellor Philip Hammond, leaders of some of the UK’s most prominent business associations have urged the government to undertake a review of the so-called ‘tax burden’ that faces the finance industry and UK entrepreneurs.
The letter, which has been signed by such groups as UK Finance, the Association of British Insurers (ABI), the Investment Association and TheCityUK, urges the Chancellor to back reforms designed to boost the UK’s competitiveness during the Brexit period.
It also calls for Mr Hammond to prioritise the creation of a new forum, to be made up of the finance sector, industry regulators and the government, and to provide ‘more support’ to financial services businesses located outside of London.
The letter states: ‘There is a clear indication from international investors and firms that they would welcome stability, certainty and streamlining of the UK’s tax system.
‘With regard to the levels of taxation, it is important that the UK remains competitive, and an independent review and analysis of aggregate levels of taxation, coupled with a benchmarking exercise against comparable jurisdictions, would be welcome.
‘This should focus not only on corporates, but also on the tax attractiveness of the UK to entrepreneurs, especially in financial technology.’
The Association of Independent Professionals and the Self-Employed (IPSE) has urged the government to increase the VAT registration threshold in order to ‘stimulate small business growth and encourage innovation’.
Under current rules, businesses must notify HMRC if their taxable turnover for the last 12 months exceeds £85,000, or if there are ‘reasonable grounds’ for believing that their turnover will exceed £85,000 in the next 30 days.
During the 2018 Spring Statement, Chancellor Philip Hammond announced a call for evidence in regard to the design of the VAT registration threshold. Responding to the call, the IPSE warned that lowering the registration threshold would ‘actively discourage’ self-employed individuals and small businesses from growing beyond it.
The business group has called on the government to raise the threshold in line with RPI.
Andy Chamberlain, Deputy Director of Policy at the IPSE, commented: ‘Lowering the VAT threshold would be disastrous for the UK economy, particularly during the uncertainty posed by Brexit.
‘The cashflow problems caused by such a move would mean people would face the stark choice of either raising their prices – causing them to lose customers – or absorbing the cost themselves, which would do significant damage to their businesses.’
Meanwhile, the Association of Taxation Technicians (ATT) also recently published its response to the call for evidence, and stated that reducing the VAT registration threshold would generate ‘unwelcome added costs and burdens’ for UK small businesses.