Business bodies call for Budget support
Chancellor Rishi Sunak will present his Spring Budget on 3rd March, and there are rumours circulating that he will look to increase Corporation Tax, Capital Gains Tax or National Insurance as a source of extra funding. Both the Institute of Directors (IOD) and the Confederation of British Industry (CBI) have called on him instead for more financial support as business owners continue to fight through the pandemic.
The IOD’s view
The IOD has called for a grant package for the millions of owner-directors who have been without financial support for almost a year. We’d certainly echo that call, given that the lack of support for Director managed businesses has affected the majority of our clients, many of whom have not qualified for any other grants or support.
Jonathan Geldart, director general at the Institute of Directors, said: ‘Entrepreneurs need to be at the front and centre of the government’s recovery plans. Businesses will be creating the jobs and driving the innovation that the economy needs to rebuild – and this Budget must support them.’
‘With battered balance sheets and ongoing restrictions, it is paramount the existing package of grants, loans, and reliefs are extended. A cliff-edge in support would be disastrous for business. Also, it is high time the millions who have not qualified for significant income support, like owner directors, are given some reprieve.’
‘Now is also not the time to be experimenting with higher taxes. Tax hikes right now risk choking off the economic recovery before it has even got started. Instead, the Budget should put a shot in the arm of entrepreneurs by providing reliefs to drive up investment in enterprising businesses and encouraging small firms to invest in technology, retraining, and green growth.’
Further detail on the IoD’s Budget recommendations:
- extend the existing Covid-19 economic support measures as long as restrictions continue, and provide a one-off grant package for owner directors who have missed out on support.
- put off major tax increases, while introducing a temporary employers’ NIC contributions cut and targeted business rates relief for the most affected sectors and for firms improving or expanding their premises.
- boost funding for scale-ups and start-ups by easing restrictions on the Government’s Seed Enterprise Investment Scheme and Enterprise Investment Scheme, doubling the maximum company investment threshold on the former.
- encourage wider investment by creating a new temporary Digital & Green Recovery Credit, to support spending in technology (eg, software, data and IT), carbon reduction, and retraining, and extending the £1m Annual Investment Allowance cap beyond the end of 2021.
- broaden the scope of courses under the Apprenticeship Levy, expand digital, management, and leadership training opportunities, and suspend the Immigration Skills Charge for small businesses.
- deliver more targeted financial assistance for Brexit adjustment, either by making such activity tax-deductible for SMEs, or by introducing a voucher scheme.
- reverse the decision to scrap duty-free shopping for tourists and visitors to the UK.
- significantly increase DIT’s resource to help businesses make better use of existing and future trade agreements.
- invest in accelerating the rollout of faster broadband, develop regional business support hubs, and encourage stronger links between universities and local businesses.
The CBI’s view
The CBI has urged the government to provide more financial assistance to businesses affected by the coronavirus (COVID-19) pandemic, but NOT to wait until the Budget to do so.
The business group has outlined support measures required to help protect UK businesses through the spring. It has called for:
- an extension of the Coronavirus Job Retention Scheme (the Furlough Scheme) beyond April to the end of June
- a lengthening of repayment periods for existing VAT deferrals until June 2021; and
- an extension of the business rates holiday for at least another three months.
The CBI has also called for an announcement of details of the successor of the Coronavirus Business Interruption Loan Scheme (CBILS).
Tony Danker, Director General of the CBI, said: ‘The Budget comes at a crucial time for the UK. The Government’s support from the very start of this crisis has protected many jobs and livelihoods, and progress on the vaccine rollout brings real cause for optimism.
‘But almost a year of disrupted demand and extensive restrictions to company operations is taking its toll. Staff morale has taken a hit. And business resilience has hit a sobering new low.
‘The Government must once again stand shoulder-to-shoulder with businesses to underwrite support for the duration, helping viable enterprises to last the course. Many tough decisions for business owners on jobs, or even whether to carry on, will be made in the next few weeks. If the Government plans to continue its support then I urge them to take action before the Budget which is still more than six weeks away.
‘The Government has done so much to support UK business through this crisis, we don’t want to let slip all the hard work from 2020 with hope on the horizon.
‘The rule of thumb must be that business support remains in parallel to restrictions and that those measures do not come to a sudden stop, but tail off over time. Just as the lifting of restrictions will be gradual, so must changes to the Government’s sterling support to businesses.’
There will inevitably be more and more discussion and speculation about the content of the Budget as it draws closer. We’ll do our best to sift through it and keep you up to date on anything that we feel is more likely to materialise!
Balancing the books whilst encouraging and facilitating the growth that the economy needs is going to be a very tough challenge. As usual, we’ll get a summary out to you as quickly as we can after the Chancellor’s speech and will of course be in touch with anyone who may need to act quickly to react to any announcements.
Please bear in mind that, sadly, we don’t get any advance warning of the content of the Chancellor’s speech and will need to wait for the small print to be released by the Treasury later in the day, or week!
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