With a raft of tax cuts and policy reforms announced in the Chancellor’s Mini Budget, we caught up with Time Finance’s CEO, Ed Rimmer, to get his thoughts on the new measures announced and what they really mean for small businesses.
SMEs account for 99.9% of the UK economy, but they were not at the forefront of the Chancellor’s Mini Budget. Scrapping the planned rise to Corporation Tax and reversing the rise to NI is welcome news for all businesses, as are the measures to curb energy bills, but these tax cuts will disproportionately benefit those that are less in need. Where are the measures to support small businesses in making investments for their growth in terms of skills and research and development? SMEs are the backbone of a healthy economy and yet there is little to support them aside from reduced energy costs, marginal tax cuts and a promise of a simplified tax system.
The Government wants to create a nation of entrepreneurs and while the emphasis for the Mini-Budget was rumoured to be on reducing costs, there are some signs that the Chancellor is looking at the bigger picture to stimulate economic growth. It’s great to see a dedicated and targeted approach to investment zones. Businesses will now benefit from a pause on business rate payments and stamp duty fees. Not only this, but businesses will have a capped National Insurance for new employees in these zones. This investment in levelling up is a great step forward for businesses and will offer firms, both large and small the opportunity to put down roots and thrive in new and bustling business communities. Tax cuts for plant and machinery will also help businesses to enhance or diversify their operations, but it is one of many measures needed to cultivate the kind of innovation that we need to see to stimulate the economy and compete in global markets.
Though the Chancellor argued the merits of scrapping the cap of bankers’ bonuses, it does point to a distortion of priorities and they are pressing ahead with these plans without scrutiny. Changes to Income Tax, National Insurance and Stamp Duty beg the question of how the Government is costing its plans. The Mini Budget has not been accompanied by forecasts from the OBR, so its impact on borrowing and economic growth are unknown. The Chancellor wants the economy to grow by an average of 2.5% but without timescales and without input from the OBR, the measures announced do feel like a bit of a stab in the dark.
We work with 10,000 UK businesses and our experience is that at the moment many small businesses are back in survival mode and that creates caution, stunting growth and ultimately economic recovery. From the Mini Budget we needed a plan from the Government that looks at the bigger picture and puts small businesses at the top of the agenda. Our former Chancellor hinted at this back in the Spring Statement, and whilst conditions have changed since then, businesses need consistency to feel confident. Yes, they need support with overheads, particularly rising costs, but they also need a Government that is behind them, that creates stability and conditions where they can be bold, ambitious and innovative. That is how we stimulate the economy.