According to a recent survey of just over 2,000 people from financial services giant PWC, it was revealed that 38 per cent of people do not know what the Autumn Statement is and 29 per cent did not believe it was relevant to them.
If you are in business and are paying wages or taxes, what is announced in the Autumn Statement has a direct impact on you and your business.
The government will publish a joint Autumn Statement and a Spending Review on 25th November detailing the plan for the coming years and the announcements will be made by the Chancellor George Osborne.
There are many statistics that have been made available to the public to speculate what the Chancellor and his team have in store for us.
Having spoken to several business owners, here are some matters of concern:
1) Business Rate Review:
Business rates are taxes charged on commercial building like shops, offices, etc. This tax was introduced 400 years ago and many believe it to be an old, outdated and clunky tax. The argument is that it is not fit for purpose in today’s increasingly online business world. But the the question is whether these taxes should be on the sales of the store or the price of the property?Some other business owners say it should be based on energy use.
Business rate make it difficult for the high street retail shops to compete with online businesses such as Amazon, Ebay, Net-a-porter, ASOS,etc. who don’t pay these taxes.
Even before the business makes a pound in sales, the business has to fork out this tax upfront — therefore many find this tax unfair.
This is in addition to all the other taxes the business is subjected to such as VAT, Dividend Tax, PAYE, Corporation Tax, Personal Income Tax, etc. In my opinion, business rates are outdated and need to be removed if not revised for the times we live in.
2) Dividend tax:
This is a tax to the individual who could be the owner/ share holder of a company when they receive dividend payment. The good thing about this tax is that dividends are made to the shareholders/owners of the company when the company is making profits— after all the other costs are fulfilled — this is the cream.
Under the old system the way dividend tax was calculated for an individual was quite complex.
In the (second) emergency UK Budget for 2015, the The Chancellor said that a new £5,000 tax-free dividend allowance would replace the current dividend tax system.
There was also an increased tax rate on dividend income, set at 7.5% for basic rate taxpayers, 32.5% for higher rate taxpayers and 38.1% for additional rate taxpayers, equivalent to an increase of 7.5% where dividend income exceeds £5,000 a year.
This protects basic rate tax payers and under the new system the high and additional rate tax payers will be worse off.
3) Bank lending:
Banks remain tight fisted when it comes to providing finance to small businesses. For established and profitable business, banks are more than eager to lend. But for a smaller growing business which has not yet proved itself, there is not much support out there. There is an increasing amount of crowd funding platforms for product led businesses but not that many in the service industry.
Besides these three, there are many other concerns SMEs have. UK businesses want stability and security after the end of the longest depression in British economic history in 2015. Small business want to ensure that there are no further costs, whether they be in the form of increased regulations, fines or invest in future security. Small businesses feel the pinch in every area of their enterprise from the overhead costs of wages, rent, prices of goods, professional fees and cyber security.
The UK government has been supporting small business and has recognised it as the lifeblood of our economy. They have continued on their support through EIS, SEIS schemes which help small businesses significantly. However, the cost of running a small business still remains high in the UK in comparison to the developing nations. We live in a globalised world and it is increasingly important for us to find innovative ways to keep business costs low to promote growth, employment and incentivise the business owners who take the risks.