Government needs to step up support for small firms at spring statement
The government needs to step up support for small businesses to turbo charge the UK economy at this month’s spring statement, according to Britain’s top small firm representative body.
Small businesses need support to cope with huge increases in raw material and staffing costs, according to the Federation of Small Businesses (FSB).
The organisation today urged Chancellor Rishi Sunak not to scrap research and development tax incentives for small firms to avoid stifling innovation in the UK.
There is growing speculation Sunak may get rid of R&D spending reliefs and use the proceeds to scale up investment incentives schemes for larger firms.
Newly appointed national chair of the FSB Martin McTague warned the move could cut spending by “small businesses operating in all our communities”.
Just four per cent of the 99 per cent of small businesses that make up Britain’s private sector see the super-deduction – which allows firms to deduct 130 per cent of qualifying capital spending from their corporation tax bills – as a top investment incentive.
The FSB has today set out several policy recommendations for Sunak to consider including in his spring statement on 23 March to help offset greater pressure on small businesses’ finances from a 1.25 percentage point national insurance and dividend tax hike.
Increasing the employment allowance, which allows small firms to reduce their national insurance bills, to £5,000 would cushion the blow of tax hikes.
Providing rebates to small businesses through the business rate system would soften swelling energy costs, the FSB recommends. Consumers will receive council tax rebates and loans to reduce their energy bills.
The measures would help around 280,000 small firms that are at risk of collapse survive, the FSB said.
“When we look back at this tumultuous period, next week’s spring statement will, for better or worse, be seen as a turning point,” McTague added.
“The Chancellor has a choice: plough on with damaging tax hikes, or take steps to protect the most fragile… firms.”