The Forum of Private Business has given the Chancellor 4 out of 10 for his Budget announcements, with a warning that continued pressure on small businesses and the self-employed is short sighted as we look to get Britain trading again.
Moving towards an equalisation of tax treatment for the employed, self-employed and unincorporated businesses is on the face of it understandable. The Forum will however be lobbying for incentives to be retained for the small businesses, as well as pushing for additional simplification of the tax rules.
The cap on business rate increases will be a welcome relief to many businesses particularly in the South of the country. The reality though is that the system itself is flawed.
The Forum will continue to lobby for a fairer system which affects all businesses equally across the high street, big business and online businesses. Pushing ahead with rises, whether capped or not, does not solve the underlying issue, and we will continue to see high street business exits until this is resolved’
Recognising that the whole Business Rate system needs an overhaul to create a level playing field both for online and high street businesses is timely, but shelving the current revaluation increases totally whilst the system is changed would have been much more welcome. By not doing so, our high streets are likely to see further business exits in the short term.
The Forum is keen to see a plan for Britain’s high streets included in the industrial strategy for the country, and sees the piecemeal impact of the business rates changes as unhelpful in isolation.
Ian Cass, Chief Executive of the Forum of Private Business said: “If there are no incentives for small businesses this would lead to fewer people taking the plunge into self-employment and job creation, and opting simply to be employed. That would be bad news both for the UK economy and for the jobs market. The immediate National Insurance changes announced will already have some prospective small businesses and small employers thinking twice.”
The increase in Dividend Tax is also an unwelcome move. Commenting further, Cass claims: “Business owners are already facing increased costs from auto-enrolment, digital tax, and business rate increases. Combined these will have a negative impact on profits. Increasing the tax rate on dividends for business owners is just another blow to the UK’s risk taking entrepreneurs. These are the very people who create growth and employment, and continuing to increase both regulatory and tax burdens on them while removing rewards is hardly smart.”
The Forum welcomes the focus on small print. “Transparency and fairness are at the heart of the Forum’s ethos,” says Cass, “but we need to ensure any changes do not unfairly impact small businesses, whilst big businesses employ expensive lawyers to circumvent new rules.”
On the positive side, the allocation of funding to the technology sector and the focus on skills wins favour with the Forum.
“Skills and support for new technologies are both on the Forum’s wish list,” Cass says, “but we need to see the funding for both spread evenly over the country as part of a countrywide growth strategy. We will be working with the Government to help policy makers understand what skills are needed by businesses, and to focus their spend in the right direction.”
“For small business owners, there are more negatives than positives in this budget,” according to Cass. “With the uncertainties of Brexit, businesses were looking for a sympathetic ear. Those with increased business rates in the South and London might have been heard, but most small business owners will be unimpressed with the Chancellor’s lack of commitment to the high street, and hard working family businesses. This government continues to neglect the small business sector at a time when they need them, to help get Britain trading more productively.”