With the Chancellor’s announcement of the Autumn Budget, many SMEs are wondering what tangible outcomes are on the table. Our CEO, Graham Davies, has worked in finance for over 14 years with companies big and small. He recently took part in a Q&A for B2B marketing geniuses Sopro, where he shared his insights on the Chancellor’s budget and what it really means for small businesses.
Read on for a summary of Graham’s tips!
In your opinion, was the Chancellor’s statement good or bad for business founders?
I think it largely depends on the sector. Many of the changes were focused on the retail & leisure sectors. But generally I would say it is fairly neutral – not good or bad.
What would you say are the highlights for business owners? Are there any actionable takeaways?
- The increase in Living Wage of 6.6% could be a problem for some sectors.
- An ongoing saving in business rates for some sectors is a huge positive and has been needed for some time – although this will be more than offset by the increase in wages.
- Cancellation of fuel duty rise. This could be a huge positive for businesses that move physical goods. However, it’s not a saving per se – it just isn’t being increased.
- The Recovery Loan Scheme has been extended. This is potentially good news for businesses that have a need to consolidate and improve their debt position, as the money is fairly cheap.
- They are looking to bring overseas workers to the UK. The plan is to open up visas to skilled workers, in order to address the shortage in the UK and encourage more investment in innovation.
A major topic that went largely unmentioned is inflation. This is going to be an issue for business over the coming 12 months or so. I don’t feel that the Chancellor has really looked to address this yet.
For businesses that are operating in the tech/online space, or disruptive businesses – there really wasn’t any significant news. The focus seems to be on supporting the hardest hit sectors, such as hospitality – which makes sense.
Is there anything that might influence the startup investment space?
The Chancellor announced an overhaul of the R&D tax credit scheme. This could be of specific interest to startups. The plan here is to make it slightly more generous, to encourage more investment in innovation in the UK.
The full details are not available yet, but more cost types will be included in the future R&D tax credit scheme. This should mean allowable expenses increased, and therefore higher payouts to startups in the tech space.
Do you think an increase in Capital Gains tax is likely to be looked at next year, having remained unaffected so far?
An increase in the normal CGT rate is probably unlikely in the short term. Having said that , an overhaul CGT started this year with the introduction of the Business Asset Disposal relief (previously entrepreneurs relief).
The level of relief could be reduced further in future, but this also counteracts the desire for the government to attract more investment in innovation to the UK.
My personal opinion is that some element of relief will remain in future – but probably not to the same level.
With cash being king for startups, is there any advice for members in terms of things they can do to safeguard against things like inflation?
Borrowing at low interest rates in an inflationary environment can be really beneficial for companies – the idea being that you should be able to get a higher return on the money than the cost of the interest.
The advice I would give is that if a company is accessing funding (debt, for example) then make sure it is being invested based on a strong business case.
Who knows what will happen with central bank rates, but sitting on cash in an inflationary environment is not a good idea – especially with such low interest rates. Deploy the cash and make the most of higher consumer prices!
To find out more about how the Autumn Budget might affect your business, or for tips on how to take advantage of the new changes, why not schedule a free call with Graham?