Yesterday (3rd December), Chancellor George Osborne delivered the Autumn Statement, ahead of next year’s general election. There were a few surprises among expected announcements, for example a welcoming stamp duty reform and the end of air passenger duty for children under 12 by 2015 (and under 16 by 2016).
As for businesses, Osborne addressed the business rate relief which will stay doubled for another year and increases in rates will be capped at 2%. In addition, small properties will be eligible for transitional rate relief. Osborne also made clear there would be a review of the reform to help traditional retail businesses compete with online retailers.
Reviewing the business rate relief will help SMEs and traditional retailers tackle the high costs it takes to keep businesses running on the high street. It is getting more and more difficult to compete with online retailers that can avoid high rent costs and overwhelming business rate tax. Many shops are relying on the festive shopping period to boost much needed sales.
Chairman of the Federation of Small Businesses, John Allan, said “The Chancellor has listened to the needs of business, despite tight public finances. The focus must be on reducing the deficit not just for this Government but whoever holds the keys to Number 11 next year”.
“The FSB is delighted to see the double small business rate relief remain for another year and a full review of the outdated business rates system, something we’ve long argued for.”
The Autumn Statement also revealed there is now to be more of an incentive for small businesses to hire apprentices as National Insurance is to be abolished for those under the age of 25. This will help get people into jobs and will provide businesses with enthusiastic and skilled workers.
Interestingly, R & D tax credit (government-backed tax relief for companies that are involved in developing technology and manufacturing) is to be increased by 230% for SMEs and 11% for large firms.
Other welcoming announcements from the statement included increased tax relief for personal allowances, an increase in ISA saving limits and frozen rates on fuel duty. Looking at the UK’s overall economic growth, GDP is expected to grow by 3% in 2014 but will slow down in the next few years to 2.4%.
Overall there have been positive announcements and changes to help SMEs this year and next. We will have to wait and see what the general election will bring next year!