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SME Owners Guide to the Election

Once again, we’re facing an election – this one was unexpected as an election here in the UK wasn’t due until 2020.  However, Prime Minister Theresa received the necessary two thirds majority in the House of Commons back in April and the election is almost upon us.  Today we’re going to look at how the proposals from each major political party is likely to impact SME owners here in the UK.

Labour is promising the following in the event that they win the election:

·        A new National Investment Bank with regional development banks across the UK that are designed to meet the specific needs of SMEs and prioritise lending to improve the funding gap.

·        To reinstate the lower small business corporation tax rate.

·        To scrap quarterly reporting for businesses with a turnover of less that £85,000 under Making Tax Digital.

·        Labour would “declare war” on late payments – any company bidding on government contracts must pay its own suppliers within 30 days.  We would also adopt the Australian system of binding arbitration and fines for persistent late payers in the public and private sectors.

·        The appointment of a Digital Ambassador to liaise with technology companies and provide support for start-ups to scale up.

·        A reform on business rates, including a switch from RPI (retail price index) to CPI (consumer price index).  It’s been suggested that business rates could be abolished altogether and replace with Land Value Tax.

Let’s take a look at what the Conservative party is promising:

·        To cut corporation tax to 17% by 2020, while increasing personal income tax allowance to £12,500 and increasing the higher rate of income tax to £50,000.

·        To “simplify” the UK’s tax system (with no information on what this would involve).

·        To ditch Cameron’s “Tax lock” – Cameron pledged in 2015 that there would be no VAT, National Insurance or income tax rise for the next five years.

·        Ensure that 33% of central government purchasing comes from SMEs by the end of parliament.

·        Regulate more efficiently to save £9 billion through the Red Tape Challenge and the One-In-Two-Out Rule.

·        To increase the National Living Wage to 60% of median earnings by 2020 with protection for people working in the gig economy.

·        A review of executive pay with companies required to publish a ratio of executive pay compared to the broader UK workforce.

·        To increase the amount levied on companies employing migrant workers.

Meanwhile, the Liberal Democrats promise to:

·        Expand the activities of state owned British Business Bank so that it plays a central role in the economy by tackling the shortage of equity capital for growing businesses and providing long term capital for medium-sized businesses.

·        To create a new start-up allowance to help new businesses with living costs during the first weeks of operations.

·        T support rapidly growing businesses to scale up by providing mentoring.

·        A review of business rates to reduce burdens on small companies.

·        To reform the Regulatory Policy Committee and remove unnecessary regulation, reduce uncertainty and support new markets and investment (particularly in low-carbon and resource-efficient innovation).

·        To add a penny on the basic rate of income tax to raise £6 billion for the NHS and social care.  Corporation tax be increased to 20% while business rates will be reviewed and reformed.

The Green Party promises to:

·        Support start-ups and creative enterprises through community credit and green investment.

·        Phase in a four day working week (maximum 35 hours) and abolish zero hour contracts.

·        A living wage of £10 per hour by 2020.

·        Transform the government owned Royal Bank of Scotland into a network of local people’s banks across the UK, obliged to lend locally and provide cheap basic banking services.

·        A crackdown on tax evasion and the implementation of wealth tax on the top 1% of earners, while reinstating a higher level of corporation tax for large businesses.

Hopefully, the information we’ve provided will help you navigate your way through what each party is offering so that you can cast your vote in a manner that suits both you and your business on June 8th