2018 Spring Statement – the business reaction

2018 Spring Statement – the business reaction

Business groups have responded to Chancellor Philip Hammond’s Spring Statement speech.

The Federation of Small Businesses (FSB) gave a broadly positive response, and welcomed the Chancellor’s commitment to tackling the issue of late payments to small firms. Mike Cherry, FSB National Chairman, stated: ‘The Chancellor is absolutely right to commit the government to eliminate the scourge of late payments, which place cruel financial pressure on more than eight out of ten small businesses.

‘The Chancellor explicitly put himself on the side of the UK’s millions of small businesses and self-employed.’

The response from the British Chambers of Commerce (BCC), however, was decidedly lukewarm. Commenting on the speech, Dr Adam Marshall, Director General of the BCC, said: ‘As deficit and debt levels improve, the Chancellor must resist calls to pour money into politically-attractive, short-term spending priorities.

‘A far stronger push is needed to fund and fix the fundamentals here in the UK over the coming months, and business wants the Chancellor to use his Autumn Budget to double down and spend to improve digital connectivity, deliver further road and rail improvements, strengthen the UK’s energy security and build more houses.’

Meanwhile, the Confederation of British Industry (CBI) praised the Chancellor for backing British businesses to ‘secure the UK’s future prosperity in a new economy’.

Rain Newton-Smith, Chief Economist at the CBI, said: ‘It’s great to see an upgrade in the state of our public finances, and rightly sensible to set more aside for a rainy day with Brexit uncertainty still weighing on the economy.

‘The CBI has long called for just one Budget in a year, creating more room for the government and business to get to work. But the Spring Statement is still important, and this one has proved more than welcome in setting the tone and vision for the country’s economic future.’

2018 Spring Statement – what to expect

2018 Spring Statement – what to expect

Chancellor Philip Hammond will deliver his first Spring Statement today at 12.30pm. We will keep you up to date on the latest forecasts, and a full summary will appear on our site tomorrow morning.

The Chancellor will respond to the latest economic and public finance forecasts from the Office for Budget Responsibility (OBR), and announce some areas for consultation on the longer-term tax challenges.

Business groups, including the Trades Union Congress (TUC), have called on the Chancellor to take necessary action to help to boost UK growth, raise wages and invest in public services. TUC General Secretary, Frances O’Grady, said: ‘The government is paying too little attention to major problems in the economy.

‘The Chancellor should not wait until the Autumn Budget to act. We need urgent action to strengthen the economy and get wages rising.’

Meanwhile, the Federation of Small Businesses (FSB) has urged Mr Hammond to reinforce his commitment to give business rates refunds to those firms adversely affected by the so-called staircase tax, and retain his promise to abolish Class 2 national insurance contributions (NICs).

Businesses ‘turning to alternative sources of finance’, research suggests

Businesses ‘turning to alternative sources of finance’, research suggests

Research published by the British Business Bank (BBB) has suggested that UK small businesses are increasingly turning to alternative sources of finance to fund their plans for growth and expansion.

The BBB’s Small Business Finance Markets report found that many small firms are turning to specialist asset finance providers and peer-to-peer lending for funding, as opposed to big banks.

The value of small business asset finance deals increased by 12% in 2017, whilst peer-to-peer lending also proved popular, with its value rising by 51% last year. The value of equity investment also increased by 79%, the research showed.

Meanwhile, the report also revealed that over the last two years, only 1.7% of small businesses sought new loans – a ‘record low’ amount, according to the BBB.

Commenting on the issue, Keith Morgan, CEO of the BBB, said: ‘A core objective of the BBB is to encourage greater diversity of finance, so we welcome the growth in the uptake of equity finance and other alternatives to traditional lending.’

However, the Federation of Small Businesses (FSB) expressed concern over the low percentage of UK small firms who sought new loans over the last two years. Mike Cherry, its National Chairman, said: ‘We’re lagging behind the US when it comes to venture capital investment in businesses to the tune of millions. That has to change.

‘Lots of small firms simply aren’t up to speed on all of their options.

‘Small firms will often start their finance journey by speaking to the bank they’ve always dealt with, leading them down a more traditional debt route that won’t suit everyone.’

Average UK small business ‘spends £5,000 on tax compliance every year’, study finds

Average UK small business ‘spends £5,000 on tax compliance every year’, study finds

A new report published by the Federation of Small Businesses (FSB) has found that the average UK small business spends £5,000 per year on tax compliance.

The FSB also revealed that small businesses spend three working weeks each year on complying with their tax obligations.

Pay as You Earn (PAYE), VAT and national insurance contributions (NICs) were highlighted in the report as being the most time-consuming taxes that firms have to deal with, with many spending an average of 95 hours per year complying with them.

An additional 46% of firms find calculating tax rates challenging, whilst a further 40% find exemptions confusing.

The FSB has urged the government to reform the UK tax system. It has proposed a series of changes intended to help simplify the tax collection process, including giving businesses an estimation of what their tax bills will look like before they are due and allowing firms to pay taxes in instalments.

Commenting on the issue, Mike Cherry, National Chairman of the FSB, said: ‘Time and money spent by small businesses on navigating the tax system is time and money not spent on innovating, expanding and creating jobs.

‘We hear a lot about the need to simplify the UK tax code. In fact, our priority should be simplification of the tax compliance process.’

As your accountants, we can help you to minimise the tax burden. Please contact us for assistance.

Government outlines reforms in response to Taylor review of employment practices

Government outlines reforms in response to Taylor review of employment practices

In response to Matthew Taylor’s Review of Modern Working Practices, the government has outlined a series of reforms, designed to give ‘flexible workers’ new employment rights.

Published in July 2017, Mr Taylor’s Review examined modern-day working practices, and outlined key principles for providing ‘fair and decent work for all’.

One of its main areas of focus was the so-called ‘gig economy’. Individuals within this industry are often self-employed, but work for firms which have a ‘supervisory relationship’ with their workers. The Review suggested that such workers should be categorised as ‘dependent contractors’, and should receive additional rights and benefits.

In response, the government has published its ‘Good Work plan’, which sets out proposals to ensure that workers know their employment rights, and receive the benefits and protections they are entitled to. The government also plans to introduce ‘day-one rights’, including the right to holiday and sick pay, and the right for all workers to request a ‘more stable’ contract.

As part of its reforms, the government has asked the Low Pay Commission (LPC) to ‘consider the impact of higher minimum wage rates’ for those on zero-hour contracts, and ruled out changes to the rates of tax and national insurance contributions (NICs) for both employees and the self-employed.

The Federation of Small Businesses (FSB) welcomed the reforms. Mike Cherry, its National Chairman, said: ‘As it takes forward Matthew Taylor’s recommendations, we look forward to working with the government to ensure that the genuinely self-employed receive the protections and rights they’re due.’

Small businesses affected by rising fuel costs, business group reveals

Small businesses affected by rising fuel costs, business group reveals

Following the news that both petrol and diesel prices have increased considerably, the Federation of Small Businesses (FSB) has revealed that many small firms are being affected by rising operating costs as a result.

Image result for Small businesses affected by rising fuel costsAccording to figures published by the government, December saw prices for petrol and diesel rise to their highest levels since 2014.

Petrol prices rose to 121.11p at the end of last year, whilst diesel prices reached 123.46p.

The increases can be partly attributed to a rise in the cost of oil. Commenting on the issue, Simon Williams, Fuel Spokesman for the RAC, said: ‘December was the month oil reached its highest point for over two and a half years – something which motorists are now feeling the effect of at the pumps.’

The FSB found that the proportion of its members reporting a rise in operating costs is at its highest in five years. Nearly a third of these members stated that fuel costs are a main contributor to the rise in operating expenditure.

Mike Cherry, National Chairman of the FSB, said: ‘Affordable travel on roads is absolutely vital to the success of small businesses and local economies. That’s why it’s critical that the fuel duty freeze set out in the Autumn Budget is continued in the future.

‘Over the coming year, we look forward to the government doing its utmost to help small firms battle the rapid rise in operating costs. Where vehicles are concerned, that also means taking a hard look at the ever-increasing Insurance Premium Tax (IPT).’

FSB finds confidence amongst UK small businesses has fallen

FSB finds confidence amongst UK small businesses has fallen

 The Federation of Small Businesses (FSB) has revealed that confidence amongst UK small businesses has fallen significantly, with 31% of firms expecting their business performance to worsen over the coming three months.

Image result for UK small businesses confidence has fallenThe FSB’s Small Business Index (SBI) found that confidence amongst small firms fell to -2.5 during the fourth quarter of last year.

According to the SBI, only 27% of businesses expect to see an improvement in their business performance in the next three months.

41% of firms reported a fall in profits, with an additional 14% of business owners revealing that they plan to downsize, close or sell their business over the next three months.

Meanwhile, 73% of small businesses stated that their operating costs have risen when compared to this time last year.

Commenting on the findings, Mike Cherry, National Chairman of the FSB, said: ‘As we progress to stage two of Brexit talks, negotiations with the EU27 are set to continue dominating the political agenda.

‘While the swift agreement of a transitional arrangement and an ambitious free trade agreement with the EU are absolutely critical, it’s spiralling costs, weak growth and flagging consumer demand at home that are front of mind for small firms day to day.’