By Josh Pitman, Director of PriorityDirect.co.uk
We all heard the spiel, this was billed as the ‘Budget for Small Business’ by the government but did it really deliver for SMEs across the country? Well, it definitely wasn’t unhelpful — there is a raft of measures that act as ‘levellers’; promising to review ancient business rates, introduce fair tax rates for those non-UK companies that declare their profits abroad (think Starbucks, Google and Amazon) and investing £600million in superfast broadband, but what impact will the recommendations actually have?
As marketing manager of http://www.priorydirect.co.uk/, I am well-placed to assess the impact of the Budget on the industry as a whole. And it’s a given that investment in superfast broadband will positively impact on the e-commerce sector — this is money well spent. In an industry already seeing £93billion spent online, industry forecasters are predicting a £500million boost to online sales each year as a result of the investment. A superfast network will help increase performance, the speed of websites and enhance the customer experience. All this will give UK-based e-commerce businesses the edge over their European counterparts, and will add to the already healthy growth seen within the sector — e-commerce is the only sector to maintain a 14-18% growth rate throughout the recession.
While this may seem like a pat-on-the-back for a favourite pupil, the Budget also delivered a well-earned admonishment to some of the more unruly members of the class. From this year the government will implement a ‘diverted profit tax’ — this will tax those businesses that declare their profits overseas therefore avoiding paying tax in the UK. Dubbed the ‘Google Tax’ other high profile tax avoiders include Starbucks, Amazon and HSBC. Bringing in an extra estimated £360million in the next tax year, this will not only pay for our public services, but also enable UK-based businesses to compete on price with large overseas companies, increasing competition within the market.
But the businesses that really need the government’s help are the smallest — start-ups, fledgling businesses and those restricted from growth by cashflow (the death knell of many an SME). It is here that the promised review of business rates could make the most difference. To my surprise, business rates date back to 1601, the reign of Elizabeth I, so it’s no surprise that they may need a refresh. An estimated 1.8million businesses in the UK pay rates raising £26.9billion last year with 50% of these being the very smallest companies — and the ones that would be hit hardest by them . The review has suggested that these small businesses would become exempt from business rates, helping their cashflow, encouraging growth and entrepreneurship and lowering prices for consumers.
And the loss to the Exchequer? A mere 6% of total business rates revenue. This measure would support online and offline businesses alike — the crippling rates of warehousing and distribution for e-commerce businesses would become a thing of the past and small independent retailers would become exempt, saving our High Streets and increasing consumer choice. Depending on what comes out of the review, this could be the ‘Budget For Business’s’ saving grace.