In the past, SMEs were often in the same basket as the beer drinkers, car drivers and smokers – an easy target for tax rises to fill a hole in the chancellor’s coffers.
However, the descent of the banking sector-induced recession on the economy revealed that old-fashioned enterprise, led by an army of entrepreneurs and SME business owners, could pull the country up by its bootstraps to get it back on an even keel.
In each of his last eight Budgets the chancellor has acknowledged the contribution of small businesses to the economy and over that period helped to make the environment a lot more welcoming for startup entrepreneurs and SMEs champing at the bit to grow.
And the figures back this up. Since the turn of the century, 1.9m small business have been established, which includes 146,000 in 2014, delivering a record-breaking 5.4m private sector businesses in the UK at the start of 2015.
I would hope that those with business ambitions are not distracted by the political arguments over disability benefits and the shadow cast by the upcoming EU debate that has dogged the Budget in the days since George Osborne stood up at the despatch box. Behind those headline-grabbing issues was a batch of measures that will help and inspire entrepreneurs to take the first or next decisive step in business.
Improved tax relief for entrepreneurs who invest in their own businesses and another cut in corporation tax, from 20 per cent to 17 per cent in 2020, along with changes to commercial property stamp duty are all incentives to build and grow a business. However, the most significant was the changes made to business rates, which has the potential to create the next boom in small business growth.
The cut in business rates will see 600,000 small firms paying no rates on the property occupied with a rateable value of £12,000 and below. Those businesses with premises with a rateable value between £12,000 and £15,000 will receive tapered relief.
This massive change will help hundreds of thousands of small companies that have been restricted by an outdated tax system. But even more significantly it opens the door to micro-home businesses to grow and expand.
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The prospect of paying business rates will have deterred so many home businesses from transforming from one-man or one-woman-bands into job-creating and sustaining enterprises. But now that barrier has been removed these home-based entrepreneurs should be encouraged to go from the kitchen table to their own dedicated business premises.
A huge percentage of small businesses in the UK are run from home. Figures from 2013 put the number at 2.9m – 59 per cent of all business in the country that year. Emma Jones, founder of Enterprise Nation, was quoted as saying these businesses contribute £243bn in turnover to the economy. That’s a significant number, about £1 for every 11 quid of turnover.
Many of these enterprises will also be one-person businesses. Moving from home to business premises creates greater opportunity for growth. And with growth, comes employment.
The money saved from paying business rates can go towards employing people or taking on apprentices. Just imagine if just half of those businesses each created a new job.
And that’s the key to maintaining our economic recovery; creating jobs that keep the economy moving. On the day of the Budget it was announced that unemployment is now 1.68m, which is down 171,000 since last year and 865,000 since 2010.
It proves the chancellor’s plan is working, which is providing the spark that can light the fire under the UK’s enterprising masses. Entrepreneurs should harness that fire and rocket-propel the economy forward to the benefit of the whole country.
Some of the best businesses have started life on the kitchen counter, including The Cambridge Satchel Company – as we found out in our interview with founder Julie Deane.
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