10th March 2017
Let’s talk…. supporting SMEs, the biggest budget losers?
With Daniel Booth, Director at Leonard Curtis Business Solutions Group
“As the effects of the chancellor’s first budget become clearer for Lifecycle’s member accountants and their clients, we take a look at what it means for the UK SME.
“Many of our members advise SMEs and initial observations would suggest that small businesses and the self-employed have been hit hardest by dividend allowance changes and increases to Class 4 NICs. We have already started working with many to determine the most financially-sound next steps to take.
“The increase in NICs is a move that has been branded by some – the Federation of Small Business included – as “tax hikes” that put small businesses at risk. With National Insurance set to rise to 10% next year and 11% in 2019, many of our accountant partners and their clients consider it to be simply a £1billion increase that puts the UK’s 4.8 million-strong self-employed population – and its future growth – at risk.
“The chancellor made it clear that he was opposed to the formation of companies as a way to reduce tax and that he believed the current rules to be unfair. Despite the Treasury stating that only those who earn in excess of £16,250 will pay more NICs, business lobbies and entrepreneurs were quick to criticise these changes.
“Feedback from many of our member accountants suggests that these changes could prevent new businesses from being formed. Others are worried that the cut in the dividend allowance and increases in Class 4 National Insurance will make life even tougher for many of their SME clients.
“As a result, at LCBSG, we have already received a number of enquiries from accountants for information and support on what these changes could mean to their clients, how to achieve the most positive outcome, how to raise any necessary additional finance to remain viable and to ensure that clients are as informed as they can possibly be.
“Similarly, we’ve been contacted by a number of accountants that represent contractors who are considering a Members Voluntary Liquidation and requesting information on our My-MVL software. The product provides a streamlined, controlled process and allows the client to enable the tax efficient extraction of funds from solvent contractor companies.
“On a more positive note, the impact of the recent business rates revaluation – that saw rates soar in some parts of the UK – will be mitigated by the introduction of a £435million package of measures.
“The key component is the provision of a £300million fund for councils to provide discretionary relief to businesses struggling with the upcoming revaluation.
“Additionally, those businesses due to lose existing small business rate relief will be helped by a cap which means their rates will not increase by more than £50 a month.
“There will also be discounts on rates for many smaller pub owners due to the proposed £1000 reduction to their rates bill.
“It’s a move that has also been welcomed by the Federation of Small Businesses, but most will argue that more work is still to be done in order to aid UK SMEs.
“So what now? We are confident that the Autumn Budget will bring about more significant changes for larger SMEs and businesses in general. Before then, it would be prudent for accountants to undertake some effective tax planning with their clients to ensure that each is best placed to overcome what comes next.”
The Lifecycle network for accountants – provided by the Leonard Curtis Business Solutions Group -provides a comprehensive range of specialist services and expert support required at times of such change.
About the Lifecycle network
Lifecycle is a unique network for accountants – provided by the Leonard Curtis Business Solutions Group.
It provides member accountants with a comprehensive range of specialist services – and the expert support required – to improve their client offering at every stage of a business’ lifecycle. From company formation to cessation and all stages in between.
Lifecycle is free to join and also offers members many additional benefits. These include eligibility for a highly competitive Professional Indemnity insurance scheme, a regular programme of free training and education and discounts on products and services relevant to their business and clients’ needs.