Small Business Matters | A Blog for UK Small Businesses

What Small Business Britain wants from …

With our Small Business Britain Charter now live we thought you might be interested to read some of the key findings from the YouGov survey which questioned over 1,000 small business owners from around Britain.

The survey was split into three focus areas, what Government needs to do for small businesses, what banks need to do for small businesses, and what small businesses can do for themselves over the next year and beyond.

In order to avoid posting a novel, we will focus on the first two today and the third tomorrow!
… the UK Government

• 40% of respondents called for a reduction in employers’ national insurance contribution.
• 30% called for Corporation Tax deferment

The UK’s small business community are a leading contributor to the country’s employment and economy. In the run-up to the 2010 General Election, small businesses are looking to the successfully elected party to develop programmes and policies that will encourage growth in this economically difficult time.

The Small Business Britain Charter goes live!

Exciting news, we are today launching our Small Business Britain Charter

A couple of months ago we decided to commission YouGov to survey over 1,000 small business owners around Britain to find out about the challenges and opportunities they face in the run-up to the 2010 General Election.

Small businesses are absolutely crucial to our economy. So instead of just announcing the results as an FYI, we decided to develop them into the Small Business Britain Charter, which will give small business owners a platform from which they can call on government, elected bodies, banks and the wider business community to support their success over the coming decade.

As well as the Charter, the Small Business Britain website, which went live today, includes profiles of small business owners who have already had a sneaky peek of the Charter and details their feedback on the areas that they most relate to. Why not take a look and see if their experiences match yours? 

Don’t forget the January tax deadline

The tax return deadline of 31st January 2010 is just around the corner. Failure to meet this could result in hefty penalties so make sure it’s at the top of your priority list. Here are a few tips to follow so you don’t get caught out by the tax man.

Submitting your tax return online - the deadline for paper returns was 31st October 2009, you must now send your tax return online which needs to reach HM Revenue & Customs (HMRC) by midnight on 31st January. By now you should have registered to use the HRMC’s online services and received your activation code.  Given that this is done, you’ve now not got a week to file or otherwise you could face a £100 penalty, on top of any tax due.

It’s also worth noting that if you’re new to the online world there’s a very small number of cases where HMRC will still allow you to send your tax return on paper - read the section 'Exceptions - where you can't file online' rules surrounding this.

Pay any outstanding tax - as well as submitting online, the full and final tax payment will need to accompany the tax return. If you have been within self-assessment for a number of years, you will now be required to pay the final amount on 31st January 2010, together with the payment on account for the subsequent tax year 2009-10.

More VAT rate changes in the pipeline for SMEs?

In an announcement last week The Shadow Chancellor, George Osborne, has declined to rule out increasing the rate of VAT should the Tories be successful in the next general election.  Mr Osborne said that while he had "no specific plan" for VAT rates that he could not guarantee that they would remain the same.

But what would an increase in the rate of VAT mean for SMEs?  For many it will be an increasing burden in already strained economic conditions. 

Video: Tax issues

Mark Wordley, Intuit ProAdvisor, discusses the recent tax changes and their impact on small businesses in the UK.

Mark responds to these questions:

*What are the main tax concerns for your small business clients at the moment?

*What help is being provided to small businesses to address these concerns?

*What can small businesses do themselves to manage their tax obligations?

Budget fails to raise small businesses’ hopes of surviving the recession

According to our latest survey, less than 2% of small businesses said that Darling’s Budget would have a positive impact on their business, while 87% said they were now less likely to vote for this Government at the next general election.

Our research highlights the discontent among Small Business Britain as a result of the Government’s lack of support. A staggering 91% of respondents said the Budget would have no impact on their chances of surviving the recession, contradicting the Chancellor’s remarks that this Budget would help ease the country out of the economic downturn. This could have a devastating effect on Britain, as small businesses play an integral role in the economy, employing an estimated 13.5 million people.

While the Government claimed that the Budget has addressed small business cash flow issues, 90% of respondents disagreed, highlighting the extent to which the biggest challenge facing businesses in the downturn has been ignored.

More reaction to the budget from small businesses...

David Anderson, Living Leaves in Hampshire:

"The Budget is an unhappy picture all round. The Chancellor started off the Budget by saying that it will help stimulate demand in the economy but the measures announced will have little impact on demand. If anything, the 2% increase on alcohol and tobacco duty will dampen demand as it will affect people’s disposable income. The increase in fuel duty tax will place an extra cost on our business as the price of materials being shipped in will rise, while reversing the VAT reduction back to 17.5% will be a further disruption and cost. At the same time, there seems to be nothing in the Budget that will offset these additional costs for small businesses so what help is the government providing? 

Budget Response from Small Business Owner

Nigel Venner, owner of Castle of Comfort Country House and Restaurant in Bridgwater:

"The 2% increase in alcohol duty will have a significant impact on our business, and our restaurant specifically. Margins will be lower when selling alcohol unless we increase prices but in the current climate when it is difficult enough to get customers through the door, we can’t see how we can do that.

"The VAT returning to 17.5 % after December will also place a huge administrative cost on us. Our systems are still getting used to the original cut, so reversing it all back will be a major headache and detrimental to the business.

Budget 2009 - The Good, the Bad and the Missing...

The Good

• Main capital allowance: Cash flow is the number one priority for small businesses in a recession. Therefore, the doubling of main capital allowance to 40% from April 2009 is positive news, particularly for those investing in new plant and machinery. 

• Loss carry back: An extension of the three-year carry back, meaning loss-making businesses can reclaim taxes on profits made in the last three years. It will help lots of businesses, but it was expected and is simply an extension of an existing measure.

• Traineeships: A £260m investment in training for persons under 25 who have been unemployed for over a year. This is good news, as any help with recruitment costs will provide relief for businesses.

• Business Payment Support Service: This tax helpline is a great relief to small business. However, now the recession is really being felt, it was essential that it was extended but this may be storing up problems for the future as taxes must be paid at some point.

• Top up trade credit insurance: Any help to reduce the risk of debts is good news. 

• Vehicle scrappage scheme: Consumers will get a £2,000 discount when trading in old vehicles. This is good news for the many thousands of small businesses in the automotive industry. However, it is too short in duration as the scheme only goes up to March 2010 and a more long-term solution is called for.

• Business rates: The spread of uplift is a positive move for small businesses.

• VAT threshold increased: While the extension of the reduction didn’t happen, the raising of the threshold to £68,000 at least means that many small businesses will fall outside the VAT bracket.

 

Intuit analysis: there is very little that is new here, some of which the Government had little or no option to implement. Initial feedback from our small business customers is that these measures will have no positive impact on them.

Budget commentary - A bad day for the high earners?

Many entrepreneurs may be asking themselves why it was that they set up in business. Was it the long hours, or the joy of the masses of paperwork to deal with? Was it to face the daily challenges of keeping the ship afloat during many difficult times? Was it to ensure that the banks received a healthy payment for their very reasonable back charges? Maybe it was so that they could provide employment and increase the tax take of the government through PAYE and National Insurance. Or maybe it was so that they could be successful and enjoy the fruits of their success through modest rewards. Whilst there are very few lucky directors of small businesses who earn over £150,000, it is the opportunity to earn which stimulates and motivates entrepreneurs to set up in business and succeed.

If the government is intent to take nearly 60 per cent in tax and national insurance when you do succeed, then why bother?

Mark Wordley, ASUK Accountants and Intuit UK ProAdvisor