Autumn Statement 2015: predictions for UK SMEs

What does the autumn 2015 five-year spending review hold for UK SMEs? We offer some predictions.

The most obvious area to begin when making predictions is the hunt for £20 billion of cuts in public spending by 2015. Business support and local government are both areas of focus, with likely ramifications for small to medium sized businesses.

The need for additional funding for the NHS and counter-terrorism – combined with lower than expected tax incomes – will likely make cuts elsewhere more severe.

  • The Department for Business Innovation and Skills (BIS) will probably suffer significant cuts. Those businesses reliant on apprenticeships and skills coming from further education could be impacted as these areas are cut. A leaked consultation on the future of the Department for Business, Innovation and Skills suggests that November’s spending review will be accompanied by a radical overhaul of the research funding system.
  • Local Government services will also be hit: less frequent bin collection may affect some businesses, fewer street lights may discourage customers of others. Public transport for some areas may also be reduced as local bus routes lose funding (zero-rated VAT for transport such as bus and coach journeys loses the Government £4.5 billion every year), potentially affecting both customers and staff.
  • Taxes are an uncertain area. Previously Tory form would suggest a preference for lessening the tax burden or at least not increasing it. But the need to spend in other priority areas of health and security could see taxes rise. A Tory manifesto pledge means income tax, VAT and national insurance are off-limits before 2020
  • Other cuts could impact a variety of areas relevant to SMEs, such as the ‘employer-supported child care’, including vouchers, which costs the Government £390 million. Company mobile phones are among the small but potentially numerous increased expenses for SMEs.

On the positive side, help with dealing with the minimum wage has been hinted for the care sector. And businesses outside of London may be cheered by greater devolution, especially for the co-called Northern Powerhouse.

The outcome of a business rates review from earlier in the year has yet to be revealed so an update – for better or for worse ­– is certainly possible.

The Federation for Small Businesses (FSB) has called for help to cope with adjustment for National Living Wage, automatic enrolment into pensions and changes to tax on dividends.

Still, most predict a conservative update.

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