By Gary Turner, UK co-founder and managing director at Xero
Marking the last spring Budget, the chancellor Philip Hammond today promised changes and support for small businesses in two major areas – the HMRC’s tax digitalisation and soaring business rates. This much needed support is a welcome move from the Chancellor in ensuring small businesses are given every opportunity to survive while economic uncertainty plagues the nation, particularly given the impact small business health can have on the UK’s economy as we enter some of the unstable times in recent history.
Making Tax Digital roll-out extension
The announcement that small businesses and landlords under the VAT threshold will have an extra year to prepare is extremely welcome, but avoids a potential disaster. Following discussions with the HMRC and accounting industries bodies and after speaking to hundreds of accountants over the last few months I had grown hugely concerned that such a short migration window was likely to be disastrous for all concerned, so HMRC have certainly made the right choice in softening their position.
A twelve month extension is not a huge amount of time given the scale of the project and will still mean a lot of work must be done in a compressed timeframe, but it is still a big improvement. The roll out was never going to be a great experience for people, particularly small businesses, but I am relieved that the government has listened to the concerns and acted upon them.
A relief to see business rates u-turn
The Chancellor’s U-turn on business rates follows intense lobbying from MPs and businesses themselves to ease the burden. Small businesses already face a significant admin and cost burden over the next two years, most prominently because of workplace pensions auto-enrolment. A huge 750,000 small businesses must roll out company pension schemes this year, and the burden is significant. There is still a way to go, particularly for businesses in London, but every change to regulation and tax is significant and will give relief to some of the 5.4 million small businesses supporting our economy.