Despite the departure of Sajid Javid and speculation of a delay, the March 11th Budget will be going ahead. After 16 months of waiting since the last Budget, it’s clear that businesses are eager to see some clear direction.
But how is the impending Budget going to impact SMEs? It’s difficult to know for sure until the day itself, however there are some key points that have been raised. So, here’s what SMEs can likely expect…
A review on business rates
Business rates have had a huge impact on smaller businesses in particular. The UK high street has long-struggled to compete with online shopping, thanks partly to the rising costs of maintaining a bricks-and-mortar outlet. Major retailers have called on the Chancellor to take action with a business rates reform in the upcoming budget.
Business rates raise around £30 billion for the Treasury per year and, although there has been some relief for retailers, many SMEs are still hoping that Johnson’s manifesto pledge to review rates will come to fruition. There has been legislation set up to re-evaluate property values in 2021, but a complete overhaul is still being demanded by retailers.
A cut to Entrepreneurs’ Relief
There were rumours that suggested Sajid Javid wanted to scrap Entrepreneurs’ Relief completely. However, it’s been reported that the former Chancellor was re-considering this before he resigned.
When closing down their company, business owners who qualify for Entrepreneurs’ Relief pay just 10% Capital Gains Tax. There are some rumours that it will be cut completely, and others suggesting that restrictions will be applied concerning the size of the relief and how easy it is to access.
A fair amount of confusion for contractors
The impending IR35 private sector reforms have already caused panic and confusion for contractors working through PSCs (personal services companies). Many contractors are facing the prospect of being treated as employees, and therefore have stopped freelancing. Confusion has also spread across businesses trying to assess whether they have to pay taxes on behalf of the contractors.
April is the current due date for the reforms to be implemented, despite repeated calls to the government to delay them. The Treasury has confirmed that the reforms will be going ahead, albeit with small changes. But businesses can expect a discussion on the government’s separate review on March 11th.
A reassurance regarding Brexit
The majority of UK businesses will still want smooth access to the EU market, and it’s likely that there will be an attempt to reassure them that Britain’s exit from the EU won’t lead to a loss of trade or barriers. The Chancellor will look to boost business confidence, with clarification on major transport construction projects, along with plans to funnel spending towards infrastructure improvements.
These improvements will likely be welcomed by SMEs, who will look to take advantage of more efficient digital networks. An increase to digital connectivity will free SMEs of geographical constraints, enabling greater flexibility in terms of remote working.
Free and confidential help
Clarke Bell can help you whether you’re a contractor who no longer needs your limited company due to IR35, or a director whose company is having cashflow problems.
For more information and free advice, contact us on 0161 907 4044 or [email protected]