Dear Chancellor, give small businesses a break this Budget

Cut the tax, ditch the forms – small firms' Budget wish list

PLEASE MR CHANCELLOR

Britain's self-employed have heard plenty of promises about making their lives easier. Now they want to see some action. With the Chancellor's Budget on 28 October fast approaching, IPSE is calling for practical changes that would put money back into small business pockets, reduce paperwork and make it worthwhile to grow. From fuel costs and VAT to National Insurance and red tape, the demands are straightforward. The question is whether the Government is prepared to deliver anything more than another round of warm words.

Photo by Sasun Bughdaryan on Unsplash

Small and micro businesses are hoping against hope that the Chancellor will make their lives easier and give their businesses a boost on 28th October.

Josh Toovey Head of Policy and Research at IPSE (the organisation for the self-employed), writing for Elite Business has a few rabbits he wants the Chancellor to pull from that famous red box:

Government has suddenly discovered the self-employed, and it’s quite the charm offensive.

The Chancellor wants small businesses to “make more profit, invest more and spend less time on forms.” The Prime Minister says he will put government “firmly on the side of the people who take risks, start companies, create jobs and bring new ideas to life.”

The Burnham government’s first Budget is only weeks away, so we are about to find out if they meant it. Warm words that go nowhere have a habit of coming back to haunt whoever said them.

Every mile counts

If your van or car is how you earn, you know the sums. Insurance and fuel costs take a bite out of every job, and for some jobs they take the whole thing. A fuel duty rise is looming over the Budget again.

The recent change to the mileage allowance was the first in ten years, and it isn’t enough. A rate the Treasury looks at once a decade will always be running behind the price of diesel. It should follow real-world running costs instead. Then business owners could take on more jobs and travel further to win them, without doing the maths twice.

Less paperwork, more earning

Nobody goes self-employed because they fancy more admin. Time is money, and nothing eats it like forms. Some paperwork is unavoidable, but government could certainly lighten the load.

IPSE has been working on exactly that as part of the government’s Small Business Regulatory Taskforce, focusing on ways to make life simpler for company directors and ending the duplication of requirements, so people aren’t telling government the same thing twice. It’s high time that this sort of progress also finds its way into the landmark fiscal event.

Hands off the VAT threshold

Some tax experts want the VAT registration threshold, currently £90,000, lowered or even scrapped. They have a point that it distorts behaviour, because owners hold back growth to stay under the limit, but that will happen wherever the line sits.

Lowering it would be a tax rise for the smallest businesses and sole traders. Thousands of micro-businesses would be dragged into a system they can’t afford professional advice on, just as Making Tax Digital for Income Tax has already done for many sole traders. If anything, the threshold should rise to at least £100,000, to reflect inflation and the rising cost of doing business.

Give businesses a reason to spend again

The employer National Insurance rise has done more damage to business confidence than almost anything else. For firms with large payrolls, every hire and every pay rise now costs more, and the sums no longer work. As a result, spending has stalled, projects are on hold and contractor engagements have been paused.

If the Chancellor wants the market moving again, reversing the increase at the Budget would be a strong signal.

Over to you, Chancellor

Too many recent Budgets have left the self-employed and small business owners with something extra to pay for or fill in. So, when ministers say they’re on the side of people who take risks, plenty of people will be waiting for the catch.