Reward urges the government to provide respite to SMEs in its Spring Statement
With SMEs already bracing themselves for the financial fallout from the government’s Autumn Budget, Reward Funding is urging the government to rethink some of its planned policies in next week’s Spring Statement, in order to lift the burden on UK business.
Nick Smith, group managing director for Reward, which provides asset-secured funding to help entrepreneurs and SMEs thrive, said: “From increasing the National Minimum Wage through to the 1.2% rise in employer National Insurance contributions (NICs), the government’s fiscal plans outlined last Autumn have sent shock waves through the SMEs we speak to on a daily basis.
“The changes to employer NICs alone have caused many firms to postpone hiring decisions and tackle a significantly higher wage bill, whilst increases to Capital Gains Tax (CGT) will naturally discourage exit strategies and external investment – stifling growth, innovation and job creation. We see first-hand through our asset-secured lending the importance of entrepreneurs to the wider economy, with hikes in CGT only likely to dampen their enthusiasm to create business opportunities.
“There were some concessions in Autumn, such as the government’s pledge to lower business rates for sectors such as retail, which provided welcome relief to SMEs. However, given that it’s still a challenging economic climate for so many businesses, we’re hoping the Spring Statement next week goes one step further and the government makes some adjustments to its planned policies, particularly around NICs and CGT.
“There is potential for NIC rises to be reviewed in relation to the charity sector next week which would be widely welcomed. There is also scope for a rethink on CGT in relation to Business Asset Disposal Relief, which would be another step in the right direction towards providing more financial incentives for entrepreneurs and investors to stimulate business growth.
“For those firms convinced that the Spring Statement will only simply rubber stamp what was pledged last Autumn, there are still some steps SMEs can take to protect cash flow and mitigate tax hikes. For example, compensating for the planned NIC rises by introducing more tax-efficient benefits such as enhanced pension contributions, share schemes or bonuses.
“At this stage it’s unclear what will be amended or even reversed, but we’d urge the government to have a rethink and make the necessary policy changes to allow SMEs and entrepreneurs to thrive, given they still remain the lifeblood of the UK economy.”