The Treasury Committee has launched an inquiry into the UK’s business rates system, in order to assess the impact of business rates on firms.
The Committee intends to examine how changes in government policy have altered the business rates system. It will also analyse ‘how the current business rates system is operating’.
Additionally, the inquiry will assess the ‘economic justification’ for a property-based business tax, taking into account the impact of business rates on rental prices and property prices. The Treasury Committee also stated that it will consider alternatives to property-based business taxes, such as the proposed Digital Services Tax.
The Federation of Small Businesses (FSB) welcomed the inquiry. Mike Cherry, its National Chairman, said: ‘The FSB has worked with the government to secure a set of reforms to business rates since 2016 – doubling small business rate relief, linking annual rises to CPI, transitional relief, and now a high streets discount.
‘The tax, however, remains regressive, and not linked to ability to pay.
‘We welcome the inquiry as the next step in building on the recent work to help, and sort out a modern tax system that balances the need to fund public services with protecting our vibrant 5.6 million-strong small business community.’
According to new research, UK small businesses are spending 15% more on tax and employment obligations when compared to 2011.
The Impact of Government Policy Index (IGPI), which was compiled jointly by the Federation of Small Businesses (FSB) and the Centre for Economics and Business Research (CEBR), found that the average UK small business spends £480,788 on complying with government policies, including business rates, auto-enrolment and Insurance Premium Tax (IPT).
The IGPI also revealed that small firms lose an average of £5,000 per year to tax administration and paperwork.
‘Come the beginning of April, small firms will not only have Brexit Day to worry about, but also Making Tax Digital (MTD), a higher living wage, rising employer auto-enrolment contributions and further business rate hikes,’ said Mike Cherry, National Chairman of the FSB.
‘The competition to attract entrepreneurs to the UK is more intense than ever. With Brexit on the horizon, it’s critical that the government at all levels does its utmost to help, rather than hinder, the UK small business owners who are being tempted to other shores.’
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A survey carried out by the Federation of Small Businesses (FSB) has revealed that confidence amongst small firms has ‘fallen to its lowest level since 2011’.
The FSB’s Small Business Index (SBI) revealed that confidence has fallen to -9.9 – its lowest level since the wake of the financial crash in 2011.
According to the SBI, 58% of small firms believe that the domestic economy is ‘restricting their ability to grow’. Lack of consumer demand, limited access to skilled staff and rising labour costs were also cited as being barriers to growth.
Commenting on the findings, Mike Cherry, National Chairman of the FSB, said: ‘Two and a half years on from the Brexit vote and small businesses are looking ahead to Brexit day with no idea of what environment they’ll be faced with in less than ten weeks’ time.
‘Come the beginning of April, small firms will not only have Brexit day to worry about but also Making Tax Digital (MTD), a higher living wage, rising auto-enrolment contributions and further business rate hikes.’
Five of the leading business groups in the UK have warned MPs that the UK is ‘not where it should be’ in regard to its Brexit plans.
The government recently confirmed that it has decided to prioritise preparing for a ‘no deal’ Brexit, and intends to advise UK businesses to begin implementing their contingency plans.
In a joint letter, the Confederation of British Industry (CBI), the Institute of Directors (IoD), the Federation of Small Businesses (FSB), the British Chambers of Commerce (BCC) and manufacturers’ organisation the EEF stated that UK firms have been ‘watching in horror’ as politicians have focused on ‘factional disputes’ rather than the practical steps that need to be taken to secure an advantageous Brexit deal.
The letter also said that firms are ‘pausing or diverting investment’ in order to prepare for a potential no deal Brexit scenario.
The business groups believe that there is ‘not enough time’ to prevent the ‘severe dislocation and disruption’ that will come hand-in-hand with a no deal Brexit scenario. They have called for MPs to ‘talk to their local business communities’ over the festive break in order to help ‘find a way forward’ when they return to Parliament.
The Federation of Small Businesses (FSB) has warned that productivity amongst UK small firms is ‘still being held back’ by poor broadband and mobile coverage.
The FSB’s warning comes in response to Ofcom’s annual Connected Nations report, which revealed that, while the availability of superfast broadband has increased, only 90% of small businesses are able to access superfast speeds.
Meanwhile, 18% of rural firms ‘still lack a decent broadband connection’, according to the report. It also revealed that rural businesses receive just 41% of 4G coverage.
It is ‘imperative’ that small firms are connected to a basic level of broadband ‘without delay’, the FSB stated.
‘Access to fast and reliable broadband and good mobile signal is vital for small businesses,’ said Mike Cherry, National Chairman of the FSB.
‘There are still so many firms coming up against agonisingly slow speeds – and when your business relies on this connection, it’s not only frustrating, but impacts on your ability to do business.
‘Most businesses want to embrace digital technology to compete and enhance their productivity, but to do this they need a decent connection and good quality service.’
Confidence amongst UK small businesses has ‘fallen to its lowest point since 2011’, the quarterly Small Business Index (SBI) published by the Federation of Small Businesses (FSB) has revealed.
The SBI currently stands at -9.9 – which, according to the FSB, reflects a ‘level of pessimism not seen since the aftermath of the financial crash’.
The FSB also found that 43% of firms expect their performance to worsen over the coming months. A further 67% of businesses do not expect to increase capital investment in the next three months, according to the SBI.
‘We’ve not seen political uncertainty weighing on small business confidence like this for many years. Planning ahead has now become impossible for a lot of firms as we simply don’t know what environment we’ll be faced with in little more than 100 days’ time,’ said Mike Cherry, National Chairman of the FSB.
‘A pro-business Brexit is one that ensures we can trade easily with the EU and have access to the skills we need. The latter is already proving a challenge, and – if we crash out of the EU on 29 March without a deal – the former will go out the window.’
However, the SBI also revealed that some small firms are continuing to recruit, with 16% having taken on a new member of staff in the past three months. An additional 68% have increased pay, and 50% of firms plan to grow their business over the next 12 months.
A new report published by the Business, Energy and Industrial Strategy (BEIS) Committee has highlighted how ‘bad payment practices’ have led to the ‘failure’ of many small and medium-sized enterprises (SMEs).
The government’s Prompt Payment Code, which was created to address poor payment practices, has ‘too often’ been ‘ineffective’, according to the Committee.
A ‘statutory requirement’ for companies to pay within 30 days should be introduced, the Committee stated. It also recommends giving the Small Business Commissioner the power to fine large businesses who pay their suppliers late.
Commenting on the report, Mike Cherry, National Chairman of the Federation of Small Businesses (FSB), said: ‘Eliminating the scourge of late payments would see 50,000 businesses saved each year, [and] add £2.5 billion to GDP, which would be a real boost to UK productivity.
‘The government must respond to this report with tough action on late payments, supporting smaller businesses to further develop their leadership and management capability, and to improve the adoption of basic digital technologies that small businesses need to grow and become more productive.’