The small business round-up: April 2022

  • 04 Apr 2022
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This episode covers all you need to know on the latest issues impacting small businesses, including the key announcements from the Spring Statement and Making Tax Digital.

This episode is in partnership with Dell Technologies, visit https://www.dell.com/en-uk for more.

Speakers/featuring:

 Tina McKenzie: Federation of Small Businesses Chair, Policy and Advocacy

 

Daryn Park: Federation of Small Businesses, Senior Policy Advisor

 

Key takeaways:

  • All the key messages from the Spring Statement – including the expansion of the Employment Allowance, and what it means for small businesses
  • The latest on fuel duty and rising energy costs
  • What the Spring Statement was missing – and why FSB is calling or action on business rates this year
  • How changes to Making Tax Digital will impact all small businesses
  • How small business can get MTD compliant - quickly and easily
First Voice magazine 0:00
This episode is in partnership with Dell Technologies. Looking for the right tech solutions for your business? Look no further. You go the distance for your business and so do we. To find out more, visit: www.dell.co.uk/smallbiz
Jon Watkins 00:29
Welcome to the latest first voice monthly roundup podcast brought to you by First Voice magazine, the official flagship magazine of the Federation of Small Businesses, and the go to podcast for news, tips and important information for small businesses and self employed. This episode is our April Small Business Round-up, in which we will take a look at some of the important issues hitting the headlines at the moment, which you need to be aware of right now as small business owners. To help us look at some of those issues. I'm pleased to say I'm joined by two guests. And they are Tina McKenzie, who is FSB chair, policy and advocacy. And she's going to talk us through the key announcements for small businesses in the Chancellor's recent spring statement. And Daryn Park, senior policy advisor at the FSB, covering finance, tax and economic policies, who will talk us through the latest developments on making tax digital. Thanks very much, both of you for joining. Tina, I'll start with you, if I may. There were a few announcements in the Spring Statement that will impact small businesses. And the first of those is the expansion of the employment allowance. Now I know this is something that was a bit of an FSB proposal, wasn't it? Can you tell us why it's important and how it's going to help some businesses?
Tina McKenzie 01:54
Sure. So this is an increase in the Employment Allowance from April of this year, and eligible employers, mostly small and micro businesses, will be able to reduce their employer National Insurance bills by up to £5000 per year. So it's a tax cut worth up to £1000 per employer. And as a result of that, Jon, that means that businesses will be able to employ four full time employees on the national living wage, without paying employer National Insurance contributions. So this was huge for us of our members, because our members are small businesses with small staff numbers. And we wanted to ensure that whilst we couldn't convince the government to give up on the National Insurance increase, that we could at least protect small businesses from some of that increase. So that was a win for us, and hugely important for the small business community. So that's an extra £1000 of a tax cut for those that are eligible.
Jon Watkins 02:53
Brilliant, thank you and what else was in the Spring Statement for small businesses?
Tina McKenzie 02:58
So we also had obviously, the five pence decrease in fuel duty, which is very important, we've got a lot of people out there where their businesses are their vehicles, and they're travelling all over the country. And the increases we're seeing in the cost of fuel via diesel or petrol is having a huge impact on small businesses. And so the 5p decrease in fuel duty, was welcome. Albeit that obviously we're still seeing not going up, we still welcome any so sort of a cut that can help businesses. And, and then also, there was an announcement that from April of this year, self employed individuals with profits between the small profits threshold, and the lower profits limit will continue to build up National Insurance credits, but will still not pay any class to National Insurance contributions. And that was important for us, because that ensures that those self employed people are nigh going up to the 12 570 level from July. And that's about 500,000 self employed people. And that's a value of £265 per year to them. So that was also a real win for us, too. So that's good news. So I think those three things are the three kind of headlines for us in the Spring Statement. But obviously, lots more today, Jon.
Jon Watkins 04:20 That's brilliant. And what's your assessment of whether this was a good or a bad Spring Statement for small businesses?
Tina McKenzie 04:27 Well, I think what we know is that it's a very bad environment out there. So you know, in the context of the fact that we've got increased, interest rates on some of the highest levels of debt that businesses are carrying, post COVID. They were supposed to be going into the recovery and then unfortunately, we have the terrible war going on the Ukraine and an increase in energy prices. And with that increase in taxes from the government, then that's all kind of layered on to make it a very tough environment. So whatever the Spring Statement was going to say it was never going to be the answer to all of our problems. And what we try to encourage the government to do is to, you know, be aware that if you, if you do not support and help some of these small businesses, which was our argument about the Employment Allowance, then in fact, you may do the opposite of what you want to do, because we may end up having to let people go; unemployment, closing small businesses down, we know that, for example, our small businesses, numbers have gone from 5.9 million across the UK, to 5.5. That is a 400,000 number of small businesses net, that have closed down over the last year and a half. And that's worrying, it's worrying for our high streets, it's worrying for investment, it's worrying for the future for us. So we've got to encourage small business within the UK, remembering that small businesses are 99% of all the enterprises in the United Kingdom, and over 2 trillion of our GDP. So we've got to protect this entrepreneurial environment that we have. And we've got to ensure that we keep businesses growing, opening, so that we can encourage higher taxes in terms of the businesses opening and then due to economic environment, rather than just upping taxes and businesses then having to close there's a way of of servicing our public services whilst encouraging business as well. And we're here to encourage the government to get that balance, get the balance right. Right. And we know FSB is working away in the background, lobbying the government on small business issues all the time. What do you focus on right now? And what perhaps, would you like to see, by the time we come around to the Autumn statement? Well, one of the biggest issues across the United Kingdom for small businesses and medium sized businesses is business rates, every government has acknowledged in the last 10 years that actually, the rate system is not fit for purpose. And we don't think it's fair, that a lot of the businesses that are taking the buildings and the high street, etc, the retailers, etc. They're carrying such a load. And we know that the government's have the challenge of where else are they going to get that 25 to 30 billion points that they bring in every year across the UK, on rates, the challenge is, that business rates are actually killing some businesses, the level of business rates now we have to acknowledge that the government in England has the business rates multiplier frozen now, for 2022 to 2023. And those retail hospitality and leisure businesses that are eligible, may benefit from a temporary 50% rate relief, which was worth 1.7 billion. But that no, in no way really solves the issue. For those businesses that want to get out, they want to start they want to open on the high street. And the level of rates is just way too high. And we see some other countries, ways that they they've adopted better solutions to this to encourage small businesses. And we want to keep that flavour on our high streets, we want to keep those small boutiques, we want to keep what's unique about the United Kingdom, High Street, we want it to be flourishing. And I think relooking at business rates is the best way for the government to encourage that small business economy right across the urban and rural network. And they've got to find a solution. So we're talking to them a lot about that. And we know that a lot of businesses have pivoted onto online. So they may also have a physical presence and an online presence, or a lot of them have just gone online. And we've just want to encourage, and that's a good thing. But we also want to encourage the government not to leave behind those that simply have to have a physical presence, because it's it's important not just in the economy, it's important for local employment. Remember, small businesses are the ones that through COVID have really helped in their communities, getting parcels to their local, elderly, you know, ensuring that they're supporting their local charities, their local sports clubs, and they're the ones that we find help the most, what we call the hardest to help into employment, those that are farthest away from the labour market. So it's not just about helping small business from an economic point of view. It takes so many boxes from our local communities, our local high streets and creating a great place to live and work. And that's something that I think the food change and restructure business rates would really help not just those small businesses, but help us all. Brilliant. Thanks Tina for that wander through the big announcements from the Spring Statement. Darren, I'd like to move on to an issue that many small businesses will likely have heard a lot about but may not fully understand the details of and that's making tax digital. For those not fully aware, can you just sort of summarise what it is and how it works?
Daryn Park 10:08
Yeah, of course, making tax digital is the government's way of digitalising the tax platform in the UK. So the idea is it's been rolled in kind of tax by tax specifically. But the idea is from X many years in the future, all taxes will be done through online platforms. And the reason for this is we are a digital economy, we are now moving into a digital age and paper transactions, paper receipts are becoming quickly a thing of the past. Making tax digital is designed to improve the efficiency in which businesses deal with the tax system. So things like cash flow, time spent on tax compliance, and the complexity of the tax system are all meant to improve quite significantly when making tax digital take up as completed effectively. But as you said, it's an it's relatively new and how it's being introduced. So we've had had a few years of MTD, for VAT so far for the large businesses, those above the kind of VAT taxable threshold. And we're now moving into a phase where it's it's moving to all VAT registered businesses. So those who deal with VAT are the ones who experience making tax digital first, but over the next coming years, it's going to be expanded into areas such as income tax, and eventually corporation tax. And I imagine others will follow suit on that as well. Jon Watkins 11:36
Yeah, great. And you know, MTD was meant to land about now beginning of April, but we're seeing what the government's calling a soft landing, rather than a hard landing. What exactly do they mean by that?
Daryn Park 11:49
So the soft landing approach is that you effectively don't have a hard deadline on when you need to switch over to the new system. So I think it's around two months from April, you have the kind of switching period. So if you don't currently use MTD compliant software, to do your tax receipts, you've got that period in which to shift over. But then I mean, the entire MTD approach so far has been a relatively soft launch. If you think about it, especially from kind of a small business perspective. It's only the larger businesses that are currently dealing with MTD. So if you're above the 85,000 pound VAT taxable threshold, you had to do it from 2019. I think it is. And so, effectively, you've had that time period and the gap between when they were told they got to get on to MTD to now where all businesses need to get onto it to wrap but in what you're referring to as the as the two month period to officially switch I suppose.
Jon Watkins 12:49 Yeah, and that two months is, is a help but it's not a huge amount of time and I'm sure it will pass quickly. So, you know, what is FSB saying about how small businesses can find out more around MTD and get themselves MTD compliant.
Daryn Park 13:06 So, I agree preparation is key. The sooner you can get yourself your business kind of up and running with MTD software, the better and the more the easier the switch will be and FSB is helping on this if you go on to the FSB websites fsb.org.uk/MTD, we have a full web page explaining the transition explain the routes in which you can use and we've partnered with a company called Rhino so if you have a membership with the FSB, you get some form of MTD, compliant software as part of that, which, which is definitely worth looking into if it's the first time you're adopting kind of online digital transaction methods.
Jon Watkins 13:50 Brilliant. Tina. Thanks so much for footsoldiers through those key Small Business announcements in the headlines right now as part of our monthly small business round up podcast series really helpful. Thank you also to our audience for listening to this episode, which was brought to you in partnership with Dell Technologies. While I have your attention, I would just like to remind you that you can subscribe to the First Voice podcasts to receive regular updates and guidance on the big issues affecting small businesses. And do please also remember that you can find a whole host of additional webinars, podcasts and other content on the first voice website at first voice.fsb.org.uk Many thanks.
First Voice magazine 14:50
This episode is in partnership with Dell Technologies. Looking for the right tech solutions for your business? Look no further. You go the distance for your business and so do we. To find out more visit www.dell.co.uk/smallbiz

 

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