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Banks, Lenders & Investors Cash Flow & Forecasting Finance General Rescue, Restructuring & Recovery Turnaround

After the budget hubris, what's in it for SMEs?

Chancellor's red boxThe drama of threatened backbench rebellions and a resignation following last week’s budget has rather overshadowed the elements of good news it included for small businesses.
The most significant of these was the increase in the threshold for business rates relief from £6,000 to £15,000. This is expected to benefit an estimated 600,000 small businesses, particularly the small High Street retailers, many of whom will no longer have to pay business rates.
Given that many small retailers have been under extreme pressure from the rise of online retail, this will hopefully level the playing field at least somewhat as will another budget measure, a crackdown on foreign firms selling products online in UK without paying VAT.
The Chancellor calculated that this measure would save them around £7 billion per year.
To offset this loss to the Treasury another crackdown on tax avoidance was announced. This was aimed at reducing the scope for larger business to reduce tax by treating debt interest as a cost or by rolling over historical losses.

Another potential boost for SMEs?

There was help, too, for entrepreneurs with an extension to Entrepreneur’s Relief by which all long term investors who hold onto shares in unquoted trading companies for at least three years will now be able to claim the 10% reduced rate of Capital Gains Tax (CGT) on the sale of their shares.
Time will tell whether this will encourage more investors to switch from property investment, which is subject to a CGT rate of 28% on sale, to put more of their money into private companies.  If so, again it will be small businesses that will benefit.
Other business-friendly measures included a reduction in the headline rate of corporation tax from 20% to 17% by 2020.
Dr Adam Marshall, Acting Director-General, British Chambers of Commerce, welcomed the support for small businesses and entrepreneurs: “He has finally taken real action to lessen the crushing burden of business rates, and sharpened incentives for entrepreneurship and investment.”

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Business Development & Marketing Cash Flow & Forecasting General Rescue, Restructuring & Recovery Turnaround

Unbalanced recovery – surprise, surprise

 

Over the past few weeks there have been a number of profit warnings from high profile companies, including Serco, Pearson, RBS, Debenhams and Morrisons, mainly based on their sales in the last quarter of 2013.

Subsequently the Governor of the Bank of England, Mark Carney, said that the so-called economic recovery was “neither balanced nor sustainable”.

Then last week Chancellor George Osborne, speaking to business leaders in Hong Kong, referred to the economy as being “not secure” and “unbalanced”.

Prior to these developments the overall message coming from Government was far more positive with unemployment falling faster than expected and predictions that the economic recovery would consolidate throughout 2014.

There had been plenty of voices warning that the recovery was far too dependent on consumer-led spending and the property market but they went unheeded.

What has changed?

Now it seems the ONS figures due to be released next week are expected to reinforce this latest message of an unbalanced and fragile recovery too reliant on consumer spending.

Could it be that we are being prepared for an unpalatable budget which the Chancellor is due to deliver in three weeks’ time? 

The message for SMEs remains that caution is warranted, close attention to cash flow is still in order and ever greater efforts to grow are needed.

As an SME owner are you more confident than you were a year ago  – or less?