With today’s UK Budget announcement confirming a rise in both employers’ national insurance payments and the rates of capital gains tax on shares, the government has not made good on its promises to offer support to SMEs.
In response, Theo Chatha, Chief Financial Officer of SME funder Bibby Financial Services, is speaking out against an anti-growth agenda and highlighting how these measures represent a threat to the success of Britain’s SME community.
The new government came into power on a mandate set to support SMEs. But this budget fails to provide them with the support they need to succeed – and will even harm their growth.
Although the Employment Allowance did show recognition of the needs of the smallest businesses, an increase in employer national insurance payments still presents a real risk to SMEs. Many are already struggling with high costs and thin margins, so making employment more expensive could result in an immediate cashflow crisis. As a knock-on effect, we could see investment levels, growth ambitions and job creation all damaged as a result.
A rise in capital gains tax also discourages the entrepreneurial spirit the UK economy desperately needs. We’ve already seen the consequences of this. According to official figures, more than 1,600 company directors have closed their businesses’ doors since the start of October – by far the highest number of closures this year and more than double the amount for the whole of last October.
With today’s budget, the government has not made good on its promises to SMEs. Looking ahead, it must recognise not just their importance to the economy, but also their fragility. For many SMEs, just a few unexpected or high costs disrupt a precious balance and throw their future into doubt.
