The General Election is nearly upon us, and with yesterday’s budgetary news – politics and how it affects our pockets may be on the minds of even the most politically adverse. With the outcome of the next election as unsure as it’s ever been, SMEs need to be aware of all the main parties’ policies, as any one of them – particularly if it goes to a hung parliament – may have a say in the way we run our business.
Here’s an overview of the top three parties’ approach to SMEs:
Labour www.labour.org.uk/economy
As the political party of the moment, we know more about Labour’s approach to small businesses, as they’ve been in power for the past 12 years.
Labour initiatives have included doubling the capital allowance rate to 40 per cent, which has increased tax relief. In addition, the Time to Pay scheme has allowed many SMEs to defer tax and National Insurance. For more information about Time to Pay, visit www.hmrc.co.uk.
To improve cash flow, Labour has implemented a Government backed Loan Guarantee Scheme for SMEs with 50 or fewer employees. This means that businesses which may have been refused finance elsewhere can get a bank loan, backed by the Government, which will guarantee 75 per cent of the money. Visit www.businesslink.gov.uk for more information.
Going forward, instead of tax cuts, Labour is proposing that businesses spread their tax payments. Labour is also suggesting tax incentives to encourage employers to take on the jobless.
The Budget
Announced yesterday, some items in the Budget will have a direct impact on small businesses, however this may be subject to change very shortly, if Labour don’t win the next Election. Many of the cuts, which will have to come into force to pay back debt, have been withheld, so the true ‘damage’ to SMEs is yet to be revealed. Fuel duty, for example, was set to go up by a whopping 2.67p, but has been held off, only rising by 1p a litre – for now…It will creep up over the coming year though, potentially crippling businesses that rely on vehicles.
More positive news includes a new, national investment corporation, to be called UK Finance for Growth, which will streamline and improve Government help to SMEs, overseeing £4bn of support.
Business rates will also be cut for one year from October, meaning a tax reduction for over 50,000 small businesses in England. For a full report on the Budget, visit: www.direct.gov.uk.
Conservatives www.conservatives.com/Policy/Where_we_stand/Economy.aspx
The Conservatives’ pledge to simplify tax and more specifically, abolish tax for the first ten jobs created by new businesses, will definitely make taking on new staff a cheaper and therefore more attractive prospect.
In addition, the Conservatives promise to return the small companies rate of corporation tax to 20p. Like Labour, they propose a similar initiative to the Loan Guarantee Scheme.
One of the party’s main criticisms of Labour is the amount of red tape, potentially stifling SMEs. They plan to reduce this significantly, cutting down on the number of forms needed to register as a new business, and making rate relief automatic, to minimise admin costs and encourage take-up.
Liberal Democrats www.libdems.org.uk/business.aspx
Like the Conservatives, the Liberal Democrats also want to cut corporation tax, but are proposing businesses be taxed on cash flow. This, they say, will help growing businesses that make accounting profits, but reinvest their funds.
A Council Tax freeze is another Liberal Democrat suggestion, which would assist the many SMEs operating from home. In addition, they plan to reduce business rates for smaller operations.
To generate money for business growth, the LibDems would encourage the creation of Local Enterprise Funds, to connect local private investors with entrepreneurs in their area.
As business women, we obviously want to be successful, so a government that supports long-term growth, by supplying affordable finance and helping in the employment of staff, has got to be onto a winner. While we all know the country’s in debt, small businesses are instrumental in the recovery of the UK’s economy, so letting them expand and prosper which potentially means more jobs for other people, has got to be a good thing. Who wins the next Election could affect your business, so don’t let the Sister Suffragettes down, research the parties’ policies and make a vote that counts.
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