Has the budget left small businesses short-changed?

The Spring Budget 2023, announced by PM Rishi Sunak, has been met with mixed reactions from the small business community in the UK. While the budget includes measures aimed at supporting businesses in the wake of the pandemic, there are concerns that small businesses have been left short-changed. Small businesses are the backbone of the UK economy, accounting for over 99% of businesses and employing over 16 million people.

The pandemic has hit them hard, with many struggling to survive. The budget was expected to provide much-needed support to small businesses, but there are concerns that it may not have gone far enough. The Federation of Small Businesses has criticised the budget, stating that it has failed to provide enough support for small businesses.

The budget: key takeaways for small businesses

The Spring Budget 2023 announced by PM Rishi Sunak had several measures to support UK businesses. Some of the key takeaways that may impact small businesses are:

• Extension of Furlough Scheme: The furlough scheme has been extended until the end of September 2023. This will provide much-needed support to businesses struggling to keep their staff employed.
• Business Rates Relief: The business rates holiday has been extended for another year until March 2024. This is expected to benefit around 1.3 million businesses.
• Corporation Tax: The corporation tax rate will increase from 19% to 25% from April 2023. This may impact small businesses that fall within the bracket of paying corporation tax.
• Research and Development (R&D) Tax Credits: The rate of R&D tax credits for small and medium-sized enterprises (SMEs) has increased from 13% to 14.5%.
• VAT Threshold: The VAT threshold will remain at £85,000 for the next two years. This will provide relief to small businesses that are just below the threshold.

While the budget has announced measures to support businesses, there are concerns that more than these measures may be needed to support small businesses.

The concerns raised by small business owners

Several small business owners and industry experts have raised concerns that the budget needs to do more to support small businesses. Let’s take a look at some of the concerns raised:

Lack of support for high street businesses

Small businesses on the high street have been hit hard by the pandemic, with many struggling to stay afloat. There were hopes that the budget would provide more support to these businesses, but it has been criticised for failing to do enough. The Federation of Small Businesses (FSB) has raised concerns that the budget needs to be addressed to the needs of high street businesses.

Lack of funding for start-ups

Start-ups have also been hit hard by the pandemic, with much needing help to secure funding. While the budget has announced measures to support businesses with R&D tax credits, there are concerns that more is required to support start-ups.

Impact of corporation tax increase

The increase in corporation tax may impact small businesses that fall within the bracket of paying corporation tax. While the government has announced that companies with profits of less than £50,000 will be taxed at the current rate of 19%, there are concerns that this may not be enough to support small businesses.

Lack of support for self-employed

The budget has been criticised for not providing enough support for the self-employed. While the furlough scheme has been extended, there are concerns that self-employed individuals may need more help.

Funding for green initiatives

The budget has announced funding for green initiatives. Still, there are concerns that more than this may not be needed to support small businesses looking to transition to a greener economy.

What small businesses can do?

Small businesses that feel they have been left short-changed by the Spring Budget 2023 can take proactive steps to mitigate its impact. Here are some suggestions:

Seek advice

Small business owners can seek advice from financial and business advisors to understand the impact of the budget on their business and what steps they can take to mitigate it. Advisors can also guide alternative funding sources and potential cost savings.

Look for alternative sources of funding

Small businesses that are struggling to secure funding may need to explore alternative funding sources such as crowdfunding, grants, and loans. They can also consider negotiating payment terms with suppliers and customers.

Focus on innovation

The increase in R&D tax credits for SMEs allows small businesses to invest in innovation and take advantage of the tax credits. Small businesses can consider exploring new products, services or operating methods to differentiate themselves from competitors.

Look for green initiatives

The budget has funded green initiatives, including the Future Fund Green. Small businesses can look for ways to incorporate green initiatives into their operations to take advantage of the funding announced by the budget.

Consider outsourcing

Outsourcing certain functions, such as finance and accounting, can help small businesses reduce costs and increase efficiency. This can also free up time for small business owners to focus on other business areas.

Thus, small businesses should take a proactive approach to the Spring Budget 2023 and explore opportunities presented to them. They can also look for ways to reduce costs, improve efficiency and differentiate themselves from competitors. Seeking professional advice and being open to new ideas can help small businesses navigate these uncertain times.

Conclusion

The Spring Budget 2023 has announced measures to support businesses in the UK, but there are concerns that it may have left small businesses short-changed. Small businesses are the backbone of the UK economy, and assessing whether the budget has adequately addressed their needs is important.

While there are concerns, small business owners can take steps to mitigate the budget’s impact on their business. Some steps small businesses can take are seeking advice, exploring alternative funding sources, investing in innovation, incorporating green initiatives, and outsourcing certain functions. Small businesses need to be proactive and take advantage of the opportunities the budget provides while reducing its potential impact.