As the nation hung on every word that Chancellor Rishi Sunak spoke, the effects of his extensive Budget 2021 have received generally a positive response from SME business owners.
However, some uncertainty is felt – the budget is relying on the fact that Covid-19 is now done with. Yet a few people are worried of the effect of new strains forcing the country into a new lockdown. We’ve acquired the opinions from some of the country’s top small business advisors and business owners to join in the discussion.
Cathy Green, director of Green Zebra Business Solutions Limited who work with SME’s said:
‘The Budget is great news for most business owners. I’m happy to see the extended support for small businesses, including management training to better facilitate businesses to get online.
‘We are incredibly pleased that the last tax return is being included in the SEISS eligibility – we have been championing this. It will help so many self employed people who have started businesses through the pandemic.
‘It was a bold move to raise corporate tax up to 25% but glad to see that it’s staggered to help smaller business owners. Looking at the numbers, borrowing is harrowingly high and we’re relying heavily on having strong economic growth over a long period of time to recover, which begs the question, what happens if Covid isn’t controlled?”
Tim Crook, Head of Tax at Discreet Law commented:
‘The UK currently has the lowest rate of corporation tax (19%) of the G7 countries. The Chancellor has to balance having the tax at a rate which supports business and encourages investment in the UK but which also maximises the tax take.
‘He has done this by increasing the rate of corporation tax to 25% for larger companies but keeping the rate at the current 19% for smaller companies.
‘The changes are to come in from April 2023, by which time it is hoped that the economy will have recovered somewhat. A rate of 25% will still be the lowest of the G7 countries.
‘Keeping the tax rate at the current level for smaller companies will help the numerous small businesses which are the lifeblood of our communities and as corporation tax is a tax on profits it is only those businesses who are actually making a profit that will pay it.’
Steve Taklalsingh, MD of UK Business at Amaiz, whose customers are all small businesses, said:
‘Amaiz welcomes the focus of the Budget on small business, particularly the self-employed who’ve been hit hardest, financially, during this pandemic. The expansion of support for the newly self-employed was desperately need as far too many were excluded. I fear that most of these businesses will have already folded as they were left with no income for nearly a year. However it should provide a boost to the record number of start-ups we see continuing.
‘It is right for the Government extend the support for however long it is needed. It would have been better to know this earlier as many of our customers have been living in fear from one announcement to another about when the funding would be cut.
‘We’re pleased to see small businesses considered in the corporation tax changes, by excluding those earning over £50k profit from tax increases. However there is a worry about how this will be managed in the future. If the profit threshold, for example, doesn’t increase with inflation, it will provide less incentive for people to start businesses and risk investment.
‘We would urge small businesses, who think they would benefit, to apply for the assistance with digital and management training as these skills are both essential for growing any business. We’ve spoken to many businesses who have only survived this year because of their management skills and their ability to go digital first. These skills aren’t just needed during a pandemic.
‘Overall it is a budget that aims to fill the black hole in the treasury finances by boosting investment and the economy, rather than collecting more tax. It goes directly against the austerity measures of previous Conservative Governments. It will be interesting to see the impact.’
Oliver Prill, CEO of Tide, the UK’s leading business financial platform on what the Budget means for SMEs, said:
‘Tide has over 300,000 SME members, so we welcome the fact that today’s was a budget for SMEs and that Government support now goes beyond COVID restrictions ending in June.
‘However, we are concerned that September will be too soon to withdraw crucial financial support. With one in five small businesses expecting to make redundancies once the furlough scheme ends there will be huge pressure for small businesses to return to pre-COVID revenue levels in just a matter of months. Pulling the furlough scheme and all other financial support from under small businesses’ feet so soon may pose a real danger.’