SMEs have recently faced a great deal of uncertainty in recent years – including through Brexit, Covid, the Ukraine war and the cost-of-living crisis. So what could the future look like following this week’s election?
In this instalment of our manifesto comparison series, Thrings Partner Ramona Derbyshire looks at some of the pledges being made in the business sector:
Conservatives
- Abolish the main rate of National Insurance entirely by the end of the next Parliament.
- Lift the employee threshold allowing more companies to be considered medium-sized, which could save SMEs at least one million hours of admin per year.
Retain key tax incentives that encourage SMEs to grow, including the Enterprise Investment Scheme, Seed Enterprise Investment Scheme, Venture Capital Trusts, Business Asset Disposal Relief, Agricultural Property Relief and Business Relief. The Tories will not increase Capital Gains Tax
- Promote digital invoicing and improve enforcement of the Prompt Payment Code to support businesses with the perennial challenge of cashflow.
- Support the legal services sector, including through an Arbitration Bill and help individuals and businesses bring cases against wealthier opponents with legislation to support third party funding of litigation.
Green
- Set up of regional mutual banks to drive investment in decarbonisation and local economic sustainability by supporting investment in SMEs and community-owned enterprises and cooperatives.
- Give local authorities £2billion per year to provide grants to help businesses decarbonise.
- Bring the Prompt Payment Code into law and bar late payers from public-procurement contracts, also mandating the Small Business Commissioner to proactively investigate potential instances of poor payment.
- Introduce a minimum wage of £15 an hour for all, no matter your age, with the costs to small businesses offset by increasing the Employment Allowance to £10,000.
- Explore legal ways for companies to be transformed into mutual organisations, especially at the point of succession from one owner to another.
Labour
- Retain a permanent full expensing system for capital investment and the annual investment allowance for businesses.
- Take action on late payments to ensure SMEs and the self-employed are paid on time.
- Improve guidance and remove barriers to exporting for SMEs.
- Reform the British Business Bank, including a stronger mandate to support growth in the regions and nations, will make it easier for small and medium sized enterprises to access capital.
- Replace the business rates system in England to level the playing field between the high street and online giants, better incentivise investment, tackle empty properties and support entrepreneurship.
Lib Dem
- Launch an industrial strategy to incentivise businesses to invest and create good jobs across the UK.
- Boost SMEs and empower them to create new local jobs, including by abolishing business rates and replacing them with a Commercial Landowner Levy.
- Improve the quality of vocational education, including skills for entrepreneurship and self-employment.
- Work with the major banks to fund the creation of a local banking sector dedicated to meeting the needs of local small and medium-sized businesses.
- Expand the British Business Bank to perform a more central role in the economy, to ensure that viable small and medium-sized businesses have access to capital and enable it to help ‘crowd-in’ private investment, in particular in zero-carbon products and technologies.
Reform
- Raise the National Insurance rate to 20% for foreign workers, whilst keeping the rate for British citizens at 13.8%.
- Lower fuel duty by 20p per litre for both residential and business users.
- Tax Lift the minimum profit threshold of corporation tax to £100,000, whilst reduce the main Corporation Tax rate from 25% to 20%, and then to 15% from Year 3.
- Lift the VAT Threshold to £150,000 Free up small entrepreneurs from red tape.
- Abolish Business Rates for high street-based SMEs.
Ramona Derbyshire, Thrings’ Head of Business Growth, said: “With the challenges businesses continue to face amidst the current economic climate, it is interesting to see such a swathe of proposed solutions being put forward in manifestos.
“Post-election, it will be important for business owners to keep on top of changing legislation and regulations to ensure they are staying compliant and are seeking commercial legal advice in order to avoid missing out on any opportunities.”
Thrings Business Growth helps start-ups and SMEs to successfully take their next steps and thrive. The firm’s team of corporate and commercial specialist lawyers are experienced in providing timely and practical business advice at all stages of the business lifecycle. To find out more, please get in contact today.