Last November, Chancellor Jeremy Hunt delivered a £14billion package to small businesses in his first autumn statement as they grappled with higher energy costs.
This time around, small businesses might not be so lucky, as the Treasury prioritizes lowering inflation and lowering public debt.
Some have predicted that Hunt has more wiggle room with public finances due to tax revenue and a lower-than-expected bill for energy support, but demands from small businesses are growing.
The ongoing effects of rising energy bills, business rates and labor market issues meant that small businesses continued to struggle through the winter.
We tell you what we might see in the budget and what small business groups are asking for.
Make or break: Small business groups call on Chancellor to introduce more support for struggling businesses
Investment
The Chancellor has made it clear that his aim is to restore some calm to the economy and bring inflation down to manageable levels.
Unlike his predecessor, there is less focus on economic growth, but business groups are lobbying the chancellor to include investment tax breaks to help the recovery.
The CBI has expressed concern over the government’s ‘super-deduction’ scheme for capital investments which ends in March. The scheme provides 130 percent tax relief on business equipment purchases.
Next month, corporation tax will drop from 19% to 25%, which will hit struggling companies harder and do little to encourage investment spending.
CBI chief executive Tony Danker said: “This budget is an opportunity to get the UK out of any recession as soon as possible and to transform the UK into a high growth, people-oriented economy. ‘innovation.”
Professional rates and taxes
Enterprise pricing has been one of the biggest sources of anxiety for small businesses in recent years.
Hunt has already extended and increased business rate relief, from 50% to 75% up to £110,000 per business. The small business and standard rates multiplier was also frozen for another year at 49.9p and 51.2p, respectively. But does it go far enough for struggling small businesses?
Helen Dickinson, chief executive of the BRC, said the need for reform is “far from over” and that the changes in the autumn statement “fall far short of the fundamental reform promised in 2019”.
“While other business taxes, such as corporation tax and VAT, rise and fall with economic changes, business rates must be paid in full whether businesses make a profit or a loss. . This makes professional rates a final nail in the coffin of many struggling stores; closing stores, costing jobs and preventing new openings.
“Any meaningful plan for the future of our cities and town centers must have at its heart comprehensive reform of our business rate system.”
The FSB wants targeted help for small businesses, stressing that the UK “will have the highest tax burden since Clement Attlee and Stafford Cripps in 1948”.
He asked the Treasury to scrap rates altogether for businesses in properties with a rateable value of up to £25,000 a year, paid for by a small increase in the multiplier on very large properties. The current threshold is below £15,000.
Kate Nicholls, who runs UKHospitality, has also called for a temporary reduction in VAT to cut costs, reduce inflation and boost demand and growth. We saw its success during the pandemic and it can be replicated now.
‘The sector has shown its potential to generate rapid economic growth and fight inflation, which the country desperately needs, and the Chancellor has the power at the dispatch box on March 15 to call on l hospitality to help him achieve his goals. I urge him to do just that.
Energy prices
The government announced the Energy Bill Relief Scheme last September to help businesses deal with soaring energy bills.
But that is expected to be short-lived, as the Chancellor has announced that the EBRS will be replaced by the energy bill reduction program from April 1.
Industry leaders have hit back at the less generous new regime, saying it does not touch the surface of growing pressures for small businesses.
We could still see additional support to help businesses pay their energy bills. It was reported that the scheme for domestic customers could continue after April, but the government has not indicated whether it will include non-domestic customers.
While there is little room for help with the rebate system, small business groups are calling for more to be done to help businesses with energy efficiency.
> Read our guide to the new discount scheme and when bills will start to come down for businesses
The FSB has called for small businesses to be allowed access to energy-efficient technology, to help cut costs, as well as a 14-day cooling-off period for energy contracts.
However, that would be very expensive, and Hunt seems to be focused on domestic customers.
FSB political chairwoman Tina McKenzie said: “There have been very encouraging signs that Jeremy Hunt ‘gets it’ – the budget is key to see if he can turn words into action.”
“We need to help people get back to work, inspire more entrepreneurs to start businesses, tackle inefficiencies in our energy use, and nurture R&D challenger companies.”
Job
The upcoming budget has been dubbed by some a “back to work budget” to deal with the crisis caused by thousands of people over 50 taking early retirement.
One of the Chancellor’s main issues is to improve labor market participation rates in a tight labor market.
Enterprise Nation is calling on the Chancellor to help the over-50s and ‘non-retirees’ into employment and self-employment.
“Unemployment is expected to rise, but there is no dedicated program to support the transition from unemployment to self-employment since the New Enterprise Allowance program was scrapped,” said Emma Jones.
“The Department for Work and Pensions should consider revising the self-employment targets for the Restart scheme so that the focus is rebalanced from finding jobs to people to helping people create their own.”
The FSB is calling for a new Kickstart-style program for those whose health problems have long kept them out of work, as well as increased employment support for the over-50s.
Reforming the apprenticeship tax, a tax used to fund apprenticeships in big business, has long been touted but could be key to getting the “economically inactive” back to work. It would cost the government little.
Another key market issue is the lack of immigration, which is having a serious impact on key industries like hospitality.
UKHospitality is calling on the government to implement minor, short-term immigration reforms ‘to counter lost sales due to labor shortages, in particular by removing or reducing the skills tax immigration and providing more flexibility for students to work longer”.
Fuel tax
Surprisingly, there was little mention of the fuel tax in the fall statement, but it is expected to rise by 23%.
Without intervention, small businesses face the biggest increase in fuel duties in 12 years, according to the FSB, with research showing that just over half of businesses see fuel as one of the main reasons for rising costs.
However, small businesses could be fighting a losing battle given the government’s focus on net zero and Hunt will want to keep a close eye on the purse strings.
The IFS has previously said that reversing a fuel duty freeze could pay for public sector wage increases.
FSB National Chairman Martin McTague said: “If fuel duties rise as planned, it would represent a missed opportunity to remove one of the obstacles that will hamper growth – but the Chancellor still has the power to rectify this. error in [the] Spring statement.
“The FSB is particularly concerned about the impact this will have on small rural businesses – for example, a cozy cafe in the South West which depends on customers going there if petrol becomes more expensive.
“Businesses that depend on cars and vans for gasoline, such as delivery services, traders and farmers, would also bear the brunt of the impact.”
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