Small firms demand cuts to taxes and employment costs to deliver growth and jobs

The Federation of Small Business (FSB) has warned that political leaders will have to provide reassurances if they are to win the votes of millions of its members.

By Rory Poulter, Personal Finance Reporter

15:59, Sun, Jun 9, 2024 Updated: 16:00, Sun, Jun 9, 2024

Cost of living: Howard Cox warns small businesses may go bust

Small business owners fear increases in taxes and other costs following the general election, according new research.

The Federation of Small Business (FSB) has warned that political leaders will have to provide reassurances if they are to win the votes of millions of its members.

The organisation has launched a small business manifesto, including a call for new legislation to support small firms through a Small Business Act

A snap poll for the organisation found one in five (20 percent) of its members have yet to decide who to vote for while a further one-in-three (33 percent) have a good idea who they will vote for but could still change their mind.

FSB’s research found 90 percent of small business owners are concerned business taxes could rise under the next Government.

Woman with Laptop and Smartphone Working in Flower Shop

53 percent of small business owners are concerned about energy costs over the next five years (Image: Getty)

At the same time, 92 percent said they were concerned a future Government could increase the costs and risks associated with employing people.

The study found that 53 percent are concerned about energy costs over the next five years and some 61 percent are concerned about the level of inflation over the next five years.

FSB’s Policy Chair, Tina McKenzie, said: “Small business owners and the self-employed are a shrewd and motivated part of the electorate.

“They’re used to weighing up competing offers when running their businesses, and it’s clear from our research that when it comes to the election they’re looking for which of the parties has the most compelling pro-small business offer.

“Small businesses are the key to securing economic recovery, driving innovation, and creating jobs in all parts of the UK."

She added: "Our small business manifesto sets out the measures needed to create the conditions for that to happen, many of which do not involve additional spending.

“We’re looking to all of those seeking to form the next Government to show their commitment to the millions of hard-working voters who run their own businesses, including through a Small Business Act so we have new legislation to protect small businesses on crucial issues such as late payment.”

The manifesto proposals include:

* Enshrining in law measures to clamp down on big businesses with poor payment practices towards their smaller suppliers.

* Improving small businesses’ ability to access finance, including closing loopholes in protections for those giving personal guarantees.

* Making a 33 per cent SME statutory public procurement target, increasing the involvement of small businesses in taxpayer-funded projects.

The FSB members say they want a commitment to a series of tax measures to support the sector. These include:

* Fundamental reform of business rates to help small businesses in all sectors.

* No increases in tax on dividends for directors of limited companies and National Insurance for the self-employed.

* A restoration of the small profits threshold for corporation tax to the previous level of £250,000.

Measures on jobs and skills include:

* Automatically increase the Employment Allowance with the National Living Wage.

* Maintain current co-investment rules to back small business apprenticeships.

* Reintroduction of universal work experience into secondary schools.

Close-up of Financial Analysis Using Calculator.

Small business owners fear increases in taxes and other costs (Image: Getty)

Measure to include start-ups include:

* Increase the number of start-up loans offered by 5,000.

* Create a new ‘new enterprise allowance’ for those out of work looking to start a business.

*Make it easier for people working for themselves to get a mortgage and save for their retirement.

Measures to drive future growth include:

* Introduce a new Small Housebuilder Strategy, to ensure sufficient capacity to achieve ambitious housebuilding targets.

*Commit to a target that at least half of all direct Government funding of private Research and Development (R&D) goes to SMEs.

*Provide consumer-style protections for smaller businesses when it comes to the energy market.