As we approach the Spring Budget announcement for 2023, there is renewed hope for small business owners across the UK. Here we explore what the upcoming reports may mean for small businesses in the UK and share our Spring Budget Wish List.
With better-than-expected self-assessment tax receipts and falling wholesale energy prices, the government has reported a small fiscal surplus of £5bn in January, reducing the year-to-date deficit to £117bn, which is £7bn more than the comparative period in the previous financial year.
Furthermore, the lower-than-expected spending on the UK energy support scheme has resulted in less borrowing than forecasted by the OBR in November.
Against this backdrop, small business owners hope the Chancellor will use the Spring Budget to announce measures to support their businesses further and help strengthen the UK economy. But can the Spring Budget boost the UK economy?
Spring Budget Wish List: Expectations and Predictions
The Chancellor is facing pressure to announce measures that could stimulate growth, such as potential cuts to corporation tax and an extension of the super-deduction scheme for new plant and machinery investment.
The government’s focus on reducing inflation continues, but additional surprises may happen on March 15th. For example, one issue the Chancellor may address is the high number of workers over 50 wanting to retire early, particularly in the medical profession. One possible solution could be raising the current cap on pension savings, currently set at £1,073,100.
Spring Budget Wish List for a Stronger UK Economy!
Scrapping the Corporation Tax Increase
The upcoming Spring Budget has many small business owners concerned about the potential impact of the corporation tax increase, set to rise to 25% for businesses with profits over £250,000. Some companies, such as AstraZeneca, have already cited discouraging tax rates in their decision to open new facilities in countries with more favourable tax regimes, such as Ireland.
Our Spring Budget Wish List includes scrapping the corporation tax increase and providing a roadmap for gradually reducing the rate over the next five years. This move would give a positive signal to businesses and boost confidence in the UK economy. It is unlikely that the rate increase will be scrapped entirely. Still, we hope the Chancellor will consider alternative measures, such as adjusting the tapering and bands, to help support small businesses.
Reverse the Planned Dividend Tax Increases
The planned increases in dividend tax are causing concern for small and medium-sized enterprises (SMEs) in the UK. Many OMBs (Owner Managed Businesses) structure their remuneration through a dividend/salary structure, and this increase will only add to their already heavy burden.
Our Spring Budget Wish List includes reversing the planned dividend tax increases to support the survival of UK SMEs. Doing so would help alleviate the financial strain on these critical contributors to the UK economy. We hope the Chancellor will consider this measure to ensure a more prosperous business environment in the UK.
Postpone Fuel Tax Rise
Small business owners across the UK face increasing challenges in the wake of the COVID-19 pandemic. To help support these entrepreneurs and their companies, we suggest postponing the planned rise in fuel tax. This would provide much-needed relief for SMEs that rely on transportation for their operations, such as haulage companies, delivery services, and tradespeople. Delaying the fuel tax rise would help these businesses stay afloat and contribute to the UK’s economic recovery. We urge the Chancellor to consider this measure part of his Spring Budget to support small business owners during difficult times.
Extend Energy Support to Help with Rising Costs
Small businesses are struggling to cope with skyrocketing energy costs, and the situation is set to worsen from April, when the support will become significantly less generous. This could force high-energy use businesses to review their options and may even lead to job losses. To help these businesses weather this storm, we suggest extending the energy support level in the upcoming Spring Budget. This would provide critical relief for SMEs already stretched to their limits and allow them to continue operating effectively. We urge the Chancellor to consider this measure to support small businesses and safeguard jobs in the UK.
Can the Chancellor Deliver on our Spring Budget Wish List?
Overall, Spring Budget predictions have small business owners across the UK hoping for measures to instil confidence, drive economic growth, and create job opportunities. As the Chancellor of the Exchequer prepares to announce the latest fiscal and monetary measures, there are calls for support that will help small businesses stay afloat during these uncertain times. From reversing the planned increase in dividend tax and postponing the fuel tax rise to extending energy support, some measures can be taken to help small businesses succeed.
We look forward to seeing what the Chancellor has in store for the UK economy and if it will deliver on our Spring Budget Wish List!
If you are a small business owner in the UK looking for guidance on navigating the Spring Budget announcements, the team at Grenfell James is here to help. Get in touch today to discover how we can revolutionise and simplify your business.