The Chancellor’s Budget 2018 has largely been welcomed by entrepreneurs and business managers in the UK, with key relief measures like EIS and entrepreneurs relief remaining intact and business rates for smaller firms being cut as well as the Annual Investment Allowance being increased from £200,000 to £1 million for two years.
Here’s what a selection of entrepreneurs and investors have to say on Budget 2018.
John Stapleton, cofounder of New Covent Garden Soups says extra Brexit funding seems positive but urged the Government to tangibly support SMEs further as Brexit approaches.
The Chancellor grasped the nettle today by allocating a further £500 million to fund preparations to leave the EU (total now £2 billion) – or so it seems. The devil is in the detail. Let’s hope this is not a re calculation of monies already, in effect, allocated to e.g. securing overseas trade deals to off-set potential EU trade losses. How much of this extra funding will make its way to SMEs – who are the most vulnerable – remains to be seen.
Larger businesses have numerous scenario plans already in place as they clearly recognise the need to prepare and they have the resources to do so. SMEs on the other hand are drowning in priorities and they need help – practical help in the form of advice and tangible support to prepare adequately for both the risks and opportunities that exist in a post-Brexit world.
“Compared to our EU counterparts, central Government-led assistance measures for SMEs has been poor”
The Chief Secretary and individual departments now need to put these funds to good use: practical help for SMEs, like “Prepare for Brexit Road Shows” up and down the country; workshops and seminars on what SMEs need to do now in advance of leaving the EU.
Government vouchers to fund Industry-specific reviews, deep-dive analysis and one-to-one sessions designed to provide specific assistance to specific Brexit-related needs (both risks and opportunities). For over forty years, businesses have never had to consider the effect of regulations, tariffs and diverging standards surrounding trade with the EU. Now this will become commonplace.
The Government must help businesses, particularly SMEs navigate this new world. Practical help coupled with real-life advice to develop company-specific action plans, implementable in real time, to mitigate risks (e.g. labour; currency; cash-flow) and deliver on opportunities (e.g. export markets; innovation) is the focus the Government now needs to drive behind the Chancellor’s announcement.
Seb Maley, CEO of Contractor firm Qdos Contractor, has urged businesses to prepare well in advance of what it describes as ‘hugely short-sighted’ but ‘manageable’ changes to the tax framework IR35.
For all of the Government’s promises to support independent workers, by announcing private sector IR35 reform, this administration has shown yet again that it is more focused on squeezing the most amount of tax out of contractors, not necessarily the right amount.
There’s no evidence to show that public sector changes have worked, while CEST – HMRC’s IR35 tool – is incapable is assessing status accurately. On top of this, the taxman’s atrocious track record in IR35 court cases demonstrates that HMRC struggles to understand the very legislation it created. For the Government to extend reform without addressing these existing issues is irresponsible, albeit not particularly surprising.
We advise that medium and large businesses in the private sector get to work immediately – because contrary to speculation – these changes are manageable. And we certainly can’t pin hopes on the Government performing yet another tax U-turn.
Given the size of the task ahead, it’s vital the businesses and intermediaries engaging contractors ensure they have the skills and expertise to make accurate IR35 assessments on a case by case basis well in advance of April 2020.
Should engagers avoid making risk averse decisions, prioritising well-informed and individual ones instead, contractors will be able to continue working outside IR35 and the businesses engaging them will minimise their risk.
Further reading on Budget 2018
- Autumn Budget 2018 predictions: what small businesses should know
- What do small businesses want from the Autumn Budget?
Reece Chowdry, founder of VC firm RLC Ventures said it was a solid budget for business and entrepreneurship.
The fact that EIS & Entrepreneurs Relief remained untouched were both major positives. It was also great to see the government allow defined contribution pensions schemes the ability to invest in start-ups unlocking £1 trillion of capital for start-up Britain.
Jonathan Richards, CEO and founder at breatheHR said a digital services tax, aimed at tech giants Facebook, Google and Amazon would further help the UK tech sector and applauded the cut to business rates.
The introduction of a Digital Services Tax – targeted at tech giants with revenues of over £500 million rather than small UK companies – will help boost this vital sector of the economy, ensuring that the UK remains one of the best places to start a tech business.
“The Digital Service Tax will encourage aspiring entrepreneurs to take the leap when starting out, and crucially, not put off investors from backing budding new businesses”
With cuts of a third to business rates for companies with a rateable value of £51,000 or less, the chancellor has shown that the government is invested in the future small British businesses. This means that the small retailers could see a saving of up to £8,000, ensuring that the high street can remain at the heart of many communities.
Emma-Jane Packe, MD of entrepreneur network The Supper Club bemoaned the lack of clarity that the Chancellor delivered when it came to the £20 million for business networks in the UK.
We were disappointed that not only did the Chancellor refer to entrepreneurs just once during his speech, he also did not reveal how the £20 million he has previously promised is going to be spent on business networks or that peer to peer learning is going to be prioritised over corporate mentoring. Executive education and insight from corporates is valued, but it often lacks authentic entrepreneurial candour which peers value to help scale their businesses.
Watch the below video on Budget 2018