Small Businesses Starting to Lose Confidence in Government
UK entrepreneurs are becoming increasingly frustrated with a perceived lack of government support – namely around Cameron’s recent tax and living wage changes
A large proportion of UK small business owners are frustrated with the lack of government support with many worried about the negative effect taxes on dividends and the new National Living Wage (NLW) could have on their business.
The research by Smith & Williamson, as part of its latest quarterly Enterprise Index, found that the number of small firms that are dissatisfied with the government’s level of support has risen by 10% in the last three months to 30%.
Companies stated that, while “broadly supportive” of David Cameron’s government, they were disappointed with the new mandatory NLW (which will rise to £7.20 from April 2016) and the new dividend taxes.
Announced in the summer Budget, the dividend taxes will mean that basic-rate payers have to pay tax on dividend income. This new tax also comes into play in April.
The study also revealed complaints from small business owners about the government’s recent cap on venture capital trusts (VCT) which limits VCT investment to £15m, or £20m if it’s a knowledge intensive company.
Other negative factors highlighted by small firms included a lack of confidence in the global economy and in banks – with 90% of respondents stating that they were considering launching a crowdfunding campaign to raise finance.
Guy Rigby, partner and head of entrepreneurial services at Smith & Williamson, commented:
“These VCT changes have been forced on us by the EU and they’re limiting the amount of money a business can raise for acquisitions and buyouts. While it’s been forced upon on the UK, the feeling is that perhaps the treasury hasn’t been too terribly robust in its defence. It will slow the finance opportunities for companies and is not helpful.”