Budgets almost never please everyone, but there are usually a few demographics that are happier than others. After changes made to IR35 legislation, for example, contractor accountants employed by the public sector would certainly have been happy with the likelihood of extra opportunities. The Chancellor may also have received a few kind words from small businesses in the UK, who appear to have come out of the 2016 budget rather well.
George Osbourne’s decision to reform business rates is one budget feature that will benefit SMEs. A raising of the relief threshold up to £15,000 means that, according to Osborne, 600,000 SMEs won’t have to pay any business rates at all.
The business boost that this is expected to provide should not be underestimated – SMEs make up around 50% of the private sector’s overall value.
Another announcement, which should benefit SMEs indirectly, is the potential for increased consumer spending the budget gives hope for. The income tax personal allowance is set to rise beyond the rate of inflation, along with the basic rate limit. Coupled with a fuel duty freeze, and SMEs will be positive that the extra pounds in the pockets of Brits will come their way.
Mike Cherry, policy director at the Federation of Small Businesses, said that the changes on business rates were a result of effective lobbying: “Our members have campaigned hard to make small business rates relief permanent, and expand it – and the Chancellor has heeded our calls, taking many small firms out of the system altogether.”
Stamp duty is another area of the budget which received a thumbs up from SMEs, with changes to the system for commercial property meaning that businesses with workplaces under a £150,000 value will be exempt. Those SMEs whose properties fall in the £150,000 and £250,000 will pay a 2% stamp duty rate.
There have, of course, been critics of the budget, some saying it was driven by political motives ahead of the referendum on the EU. Even from an SME standpoint, there are those that say it could have done more. Some commentators have reinforced the call for the simplification of tax code across the board, avoiding the complexities that chopping and changing have led to over the years. Not many small companies have the resources to bring limited company accountants on board, and by making taxes simpler, the government can ease the time drain on UK SMEs.
