So we’ve all heard and seen the media coverage surrounding the first Conservative budget in 18 years and we will have each thought about how it impacts upon us as individuals. Here is a quick overview of the Budget 2015 and the impact on SME businesses across the UK.
Increase in National Living Wage – From April 2016 the National Minimum Wage for over 21’s will increase from £6.70 per hour to £7.20, with further increases so that it reaches £9.00 by 2020. Smaller businesses with a high proportion of employees on minimum wage are the ones that will feel the impact of this the most.
Reduction in Corporation Tax – Corporation tax will decrease from the current rate of 20% to 19% by 2017 and 18% by 2020. The lower rate is meant to give businesses a chance to grow, however for SMEs and Start-ups that only have small profits this change is unlikely to have a significant impact. It could however improve the cost pressure of wage increases all of this depends upon how many low-paid employees a business has and how profitable the business is.
South West will benefit from a £10m programme to improve broadband – This is useful for Telecoms providers operating in the South West. It will hopefully be the same kind of project like the Superconnected Cities rollout we have enjoyed the benefit of across Yorkshire for the last 12 months.
Rates, rents and late payment issues ignored – Ignoring business rates is a good thing as it suggests that small business rate relief is here to stay, the key area that should have been highlighted was that of late payments as this significantly affects small businesses and it’s usually the ‘big boys’ that benefit.
NI Employment allowance rises from £2000 to £3000 – This increase helps to lower the wage bill of SME businesses and has the potential to offset the impact of the increased National Minimum Wage increase.
Small business investment allowance now at £200,000 instead of the £25,000 it was due to drop to in January 2016 – in the previous budget the Chancellor stated that this allowance was going to drop to just £25,000 which meant that many SMEs that regularly invested in equipment, plant and machinery would be losing out. By keeping the level of tax-deductible investments at £200,000 will continue to encourage businesses to invest in the future but will also add an additional £1bn to the GDP by 2020.
Extended Sunday trading hours – Local councils are being given the decision making powers over Sunday trading hours. The knock on effect for small businesses is that this could see the larger corporate retailers staying open later and enabling them to increase their share of customer spending on weekends.
New Enterprise zones – Enterprise zones are geographical areas where SMEs pay reduced taxes and receive business support, the aim of these enterprise zones is to create more start-ups and help increase the growth of small businesses. The most likely places to benefit are the cities in the ‘Northern Powerhouse’, specifically Leeds, Liverpool, Manchester and Sheffield, the government has also invited smaller cities to submit their pitches to create Enterprise Zones.
Access to Finance – There are calls for the UK’s major lenders to share the financial information they hold on SMEs to improve the chances of these companies securing business loans. “The British Business Bank has also been tasked with “increasing and diversifying” the supply of finance available to SMEs. The Bank will facilitate up to £10bn of finance by 2019, according to new forecasts.” Says The Guardian.
What are your thoughts on the latest Budget? How do you feel it will impact upon your business?
ABL Business Ltd are perfectly placed to support SMEs with both Access to Finance and Enterprising Activities. If you’d like to discuss the Budget or any of your SME business issues then give us a call on 01274 965356.