Why was the budget bad news for SMEs?
Julian Cockwell, KPMG’s Head of Tax for the South West, explains: “The region’s SME community did not fare well in today’s budget thanks to proposed NIC increases to equalise the NIC rate for the self-employed and employees, and a a reduction in the dividend allowance from £5k to £2k from April next year.
“For those entrepreneurs who believe reduced NI is the trade-off for a lack of paid annual leave and sickness pay, today’s announcement may be a bitter pill to swallow.
“There were some sweeteners of course; the delay to digital tax reporting for micro businesses will no doubt alleviate some of their administrative burden, and the cushion for those businesses coming out of small business rate relief is also good news.
Julian continues:“Our local authorities will also be encouraged by the flexibility afforded by the £300 million earmarked for discretionary relief. Their priority will now be to forge closer relationships with our local business communities to better understand their needs and those of the economy, while also maintaining a sustainable revenue base.
“For our larger businesses, the Government is clearly eager to maintain the mantra that the UK is open for business with the Chancellor renewing the commitment to reduce the headline corporate tax rate to 19% in April of this year (the lowest in the G20) and 17% in April 2020.
“The confirmation of the introduction of T-Levels is very welcome in my opinion, and I hope that this will go some way to bridging the skills shortage that is holding businesses back in our region.”