Tech and taxes: What do SMEs want to see in the upcoming Budget?
Small businesses across the UK have called on the government to prioritise their needs in the upcoming Autumn Budget to avoid a slowdown of growth.
The pleas come as a recent government survey highlighted the growth of UK small businesses over the past year, revealing an increase in hiring activity and growth ambitions.
Of the nearly 10,000 small businesses surveyed, some 28 per cent had increased their workforce last year, with 40 per cent seeing a growth in sales.
It also revealed a desire for expansion, with some 80 per cent of those who operate across retail, manufacturing, and administration sectors remaining optimistic about growth ambitions.
Mike Randall, chief executive at specialist lender Simply Asset Finance, said in order to maintain momentum, Chancellor Rachel Reeves must prove her devotion to pro-business policies during the highly-anticipated Autumn Budget on 30 October.
It also comes as business confidence dropped to a three-month low this month, falling three percentage points in yet another sign that firms are beginning to brace for the upcoming Budget.
“While obstacles to growth do still remain… looking ahead it’s about how we now capitalise on SMEs’ ambitions for growth,” Randall said.
“While obstacles to growth do still remain – rising costs, high energy prices, competition – looking ahead it’s about how we now capitalise on SMEs’ ambitions for growth,” Randall said.
“As the October Budget looms… the Chancellor must wholeheartedly prioritise pro-business policy. Only then can we ensure that SMEs are able to continue their role as the driving force behind the UK’s economic recovery,” he added.
Taxes: Are small businesses worried?
Rachel Reeves might have delivered her keynote speech at the Labour Party conference last week with a surprisingly “upbeat” tone, but many industry figures have continued to voice their concerns.
Former Chancellor Jeremy Hunt today warned during the Conservative party conference that Labour should avoid making “catastrophic mistakes” in the Budget and hiking up “tax in a way that destroys growth”.
Sandeep Dhillon, chief executive of SME recruitment marketplace Talmix, said: “I really hope that the slightly more upbeat messaging from Rachel Reeves [last] week will lead to a recognition that growth is the outcome we should focus on, regardless of what is needed to fix the foundations.
“My concern is that those foundational fixes will make the growth aspects seem so far out, that smaller businesses will not feel they have any immediate upticks.”
My concern is that those foundational fixes will make the growth aspects seem so far out, that smaller businesses will not feel they have any immediate upticks.
Dhillon warned that the “expected changes” in Capital Gains Tax could have a detrimental impact on the start-up investment ecosystem as investors “look to deploy their capital elsewhere”.
He also stated his concerns about the rumours around a potential increase in Employers NI, which could put an end to hiring activity.
“We have already had to account for wage inflation in the last few years without being able to pass these costs on to our customers,” Dhillon said.
“Therefore it’s likely that businesses like ours may either choose to hire fewer people in the UK or alternatively look to access talent outside of the UK that may be more cost-effective,” he added.
Emma Jones, founder of small business support platform Enterprise Nation, said tax incentives for small businesses to up-skill their workforce would be a “wise investment.”
Another recent survey by Enterprise Nation found that 60 per cent of small businesses warned that the current “tax burden” is too high and any further hikes could have a negative impact on both confidence and profits.
“We urge the Chancellor to refrain from increasing Capital Gains Tax, in the recognition that entrepreneurs make so many financial and life sacrifices to grow their businesses,” Jones said.
Boosting digital adoption and investments
With an increase in small businesses using new technology and software, Jones said this must be an area of priority during the upcoming Budget as certain incentives could further improve economic growth potential.
The new Labour government has already come under fire in recent months after scrapping £1.3bn in AI and tech funding. It was a decision some said would “slow Britain’s progress in becoming a global tech leader”.
There needs to be more investment into digital training programmes, Jones said. Enterprise Nation recently launched its ‘Tech Hub‘ that took on the work that was lost with the closure of the government’s ‘Help to Grow: Digital’ scheme in 2022.
Jones said: “We’re calling for measures to boost small business tech adoption through targeted tax incentives and time-limited subsidies, as well as supporting businesses with AI and technology skills so they can compete in the next global wave of digital change,” she said.
Claire Trachet, chief executive of advisory firm Trachet, said the UK will risk its crown as a “leading hub for tech start-ups” if innovation and growth are not prioritised.
Trachet added: “We must create an environment where founders feel confident that their risks will be rewarded.
“A short-term focus on tax revenue risks losing a key growth area for our future economy – one that relies on the ambition and innovation of entrepreneurs.”