7 April 2017 09:00
New financial year brings rising costs for SMEs
Business groups are calling on the Government to do more to help UK small businesses as the new financial year brings higher costs and tax hikes.
"We enter a new tax year with a raft of changes adding to the upfront cost of doing business," said Suren Thiru, Head of Economics at the British Chambers of Commerce (BCC).
"While corporation tax is decreasing, companies are more concerned about the escalating burden of input costs which hit firms before they even turn over a single pound.
"Companies of all sizes will now see the introduction of the Apprenticeship Levy, Immigration Skills Charge, a new National Living Wage and pensions auto-enrolment. Such costs are likely to cause many firms to implement cost reduction measures and weigh down on firms' ability to invest, recruit and grow their business."
Mike Cherry, National Chairman of the Federation of Small Businesses (FSB), said: "The average FSB employer will pay an extra £2,600 this year as a direct result of Government decisions. This is due to the combined impact of [the] increase in the National Living Wage, consequential National Insurance costs and pensions auto-enrolment contributions."
FSB research shows that most small business owners absorb the cost of wage increases by taking lower profits.
"We're seeing increasing numbers of small business owners not paying themselves or stopping their own pension contributions to meet these new employment costs," said Cherry. "Many already report that they are struggling to meet their growing payroll obligations. This is particularly visible among those operating in sectors with tight margins, such as hospitality, retail and social care."
At the same time, many businesses are also facing a business rates revaluation. Although the FSB has welcomed the Government's new £300m fund to help those facing the biggest hikes, it is calling on councils to distribute that money "as quickly and fairly as possible".
Mike Cherry said: "Today's hike in business rates will leave many UK entrepreneurs considering the future. What we have to remember is that bills have already landed. That being the case, any firm that pays their full business rates without realising they qualify for relief should have their overpayment returned automatically, and swiftly."