We have waited with baited breath; first came the election and now the eagerly anticipated Summer Budget announcement. How will the cuts and spends affect SMEs?
SMEs will undoubtedly feel the pinch of the 'New Living Wage' and it appears the loss will not be counteracted by the extension in the 'employment allowance', nor will it be recouped through changes to Corporation Tax as many businesses are just too small to reap the rewards of the latter. Will we experience an adverse affect on the 'Buy British' efforts as many businesses could opt to outsource labour? What would Mary Portas have to say about that!
Business rates and business rents did not feature in the budget and have once again been swept under the carpet, with the Government deciding that SMEs would benefit from extending Sunday opening hours rather than restructure business rates and relaxing planning and licensing laws. The Annual Investment Allowance was also decreased from £500,000.00 to £200,000.00 – not exactly welcomed news for our nations SMEs.
A new Dividend Allowance could result in business owners actually getting more cash in their back pocket, or will it just lead to bigger accountancy bills as people try to tax plan more effectively due to the changes?
It was disappointing to see that there was no relief for ‘buy to let’ landlords, this coupled with the new Licence Fees is a double blow for landlords.
On a more positive note, the Government has included new initiatives that could play a vital economic role for SMEs, particularly for northern cities, including Liverpool and Manchester, that will have the opportunity to pitch for the new enterprise zones. This hopefully will stimulate SME growth and start ups as these zones will provide much needed business support and reduced tax.
In addition, it was announced that loans and finance will be more accessible for SMEs as the initiative for banks to share information about SMEs is introduced..
Osbourne has said himself "this is a budget for working people", but I sense there will be a level of discontent amongst SMEs at the Government's lack of effort to inspire a sector that played such a vital role to its General Election campaign.
Overall, perhaps a disappointing and a 'blue' budget in every sense.