A freeze in the small business rates multiplier and the announcement on late payments in the UK’s Chancellor’s Autumn Statement were welcomed by many SMEs, but some commentators do not think the measures went far enough.
Chancellor, Jeremy Hunt, said yesterday that the small business multiplier will be frozen for another year, while the 75% Retail, Hospitality and Leisure [RHL] relief will be extended for 2024-25. The standard multiplier will be uprated in line with September’s consumer price index.
He also acknowledged the challenge facing SMEs with cash-flow implications of late payments.
Alongside publication of the Payment & Cash Flow Review Report and action taken through the Procurement Act, the government will lead by example in introducing more stringent payment time requirements for firms bidding for large government contracts. From April 2024, firms bidding for government contracts over £5 million will have to demonstrate they pay their own invoices within an average of 55 days, tightening to 45 days in April 2025 and to 30 days in the coming years.
The government is also expanding the Made Smarter Adoption programme, aiming to help more manufacturing SMEs use advanced digital technologies. The government is also setting up a taskforce to rapidly explore how best to support SMEs to adopt digital technology.
The government will also cut and simplify self-employed taxes from April 6, 2024. The main rate of Class 4 self-employed NICs will be cut from 9% to 8%, and the complicated Class 2 self-employed NICs will be abolished.
To unlock business investment the government will make full expensing permanent. Companies across the UK will be able to write off the full cost of qualifying main rate plant and machinery investment in the year of investment, supporting businesses to invest and grow. This means companies are rewarded
with up to 25p off their tax bill for every £1 that they invest.
Alan Thomas, UK CEO at Simply Business, one of the UK’s largest providers of small business insurance, comments on what the Autumn Statement means for small businesses across the UK: “The Chancellor’s rush of reforms for small businesses and self-employed people will be well received by many, but concerns remain around whether they can fortify this over-stretched sector.
“Our research revealed that an eye-watering £32 billion in late payments is owed to small businesses, and the Chancellor’s introduction of rules for firms bidding for government contracts do very little in the way of helping to recoup the thousands of payments still outstanding. The government itself has said that paying small businesses on time could boost the economy by £2.5 billion annually – yet decisive action has not been taken.
“The business rates support package, particularly the extension of the business rate relief and freeze in the small business multiplier is a welcome update. But a rise in the standard rate multiplier has been described as ‘disappointing’ by industry leaders, who have pointed to the fact that hospitality businesses broadly operate out of larger premises.
“The Chancellor also failed to commit to increasing energy support for small businesses. Over a quarter of SMEs are spending up to 40% more on energy each month compared to last year. Many were forced to renew long-term contracts at the peak of the market, which has pushed their energy expenditure to levels unheard-of. With the rates now stabilising, the Chancellor should review the assistance available to non-domestic users, with a clear focus on assisting smaller businesses in covering essential bills.
“Thousands of small businesses are being held back – not because of apathy or lack of ambition, but because of a set of circumstances which are stretching them to the limit. Nonetheless, in a show of determination which is so characteristic of this sector, our research found that three-quarters of SMEs remain confident about the prospects for their business. The Chancellor’s aspiration to ‘supercharge’ the growth of the UK’s SMEs has, for many, missed the mark.”