A number of UK business organisations are pushing the UK government to do more to assist the nation’s small and medium-sized enterprises (SMEs) as the new financial year results in increased costs and tax increases.
Suren Thiru, head of economics at the British Chambers of Commerce (BCC) believes the “upfront cost of doing business” will affect SMEs given the recent changes to the UK tax system and is keen to see more support afforded to the heartbeat of the British economy.
“While corporation tax is decreasing, companies are more concerned about the escalating burden of input costs which hit firms before they even turn over a single pound,” said Thiru.
“Companies of all sizes will now see the introduction of the Apprenticeship Levy, Immigration Skills Charge, a new National Living Wage and pensions auto-enrolment.
“Such costs are likely to cause many firms to implement cost reduction measures and weigh down on firms’ ability to invest, recruit and grow their business.”
Meanwhile, Mike Cherry, national chairman of the Federation of Small Businesses (FSB) claims the average business employer that’s part of the FSB will “pay an extra £2,600 a year” following the government’s recent economic decisions; namely the “National Living wage, consequential National Insurance costs and pensions auto-enrolment contributions”.
Recent FSB research indicated that many small business owners simply have to absorb those addition wage increases by accepting reduced profits.
“We’re seeing increasing numbers of small business owners not paying themselves or stopping their own pension contributions to meet these new employment costs,” said Cherry.
“Many already report that they are struggling to meet their growing payroll obligations. This is particularly visible among those operating in sectors with tight margins, such as hospitality, retail and social care.”
Simultaneously, many UK businesses are facing up to the prospect of business rates revaluation. The FSB wants the government to roll-out its new £300m fund, designed to aid business owners facing the biggest rates increases.
“Today’s hike in business rates will leave many UK entrepreneurs considering the future,” added Cherry.
“What we have to remember is that bills have already landed. That being the case, any firm that pays their full business rates without realising they qualify for relief should have their overpayment returned automatically, and swiftly.”
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Image: Davide Simonetti