Analysts predict short-term Budget fixes to help SMEs
The Chancellor is likely to introduce short-term fixes to ease small firms’ cashflow problems when he makes his Budget speech on 22 April, independent think tank the Tenon Forum has predicted.
Speculating on what this month’s Budget might bring for small firms, Tenon’s head of tax, Andrew Jupp, said that the success of the Government’s Business Payment Support Service – which allows businesses to delay tax payments – meant it was probable that the Chancellor would announce further tax management measures to help ailing businesses.
“We would not be surprised to see more being done in this area and HM Treasury has indicated it is agreeable to this,” said Jupp.
“We would like to see businesses able to access the tax benefits of trading losses earlier than they can at the moment, either by allowing claims to be made during the year, rather than only after the year-end, or being able to set trading losses against PAYE and national insurance liabilities,” he said. “This may be the difference between many small businesses surviving or failing.”
Jupp added that he also hoped to see real attempts to cut red tape for small firms. “The simplification of VAT accounting would be particularly well received, if it meant firms were no longer required to submit returns each quarter but pay a flat rate annually based on turnover,” he said.
The Federation of Small Businesses (FSB) agreed that the regulation of cashflow was a priority for small firms, and said the Government urgently needed to improve access to bank finance in its Budget submission.
“The Government must take decisive action to inject life into the economy and resolve the big problems faced by small businesses – the double whammy of irregular cashflow and a lack of finance from the banks,” said FSB national chairman, John Wright.
“We would like to see the introduction of a corporate mediator to rebuild the relationship between banks and businesses, alternative banking solutions such as the Post Bank, and making rate relief automatic at no extra cost,” he added.
“Tackling rising unemployment is also going to be vital,” said Wright. “Wage subsidies for employers and employees moving towards short-term working, coupled with raising personal tax thresholds to £10,000, will put money back into the pockets of staff and the businesses that hire them.”
The Budget speech will be available to read on 22nd April on the HM Treasury website.