Chancellor George Osborne has delivered his 2015 Autumn Statement and Spending Review, outlining how the government will allocate its budget over the coming months.
There was a lot at stake for SMEs as, prior to the statement, the government was considering scaling down its small business rate relief scheme.
The good news for small businesses is that the Chancellor has announced the extension of the rate relief scheme until March 2017. This means that, for the next 16 months, companies with one property that has a ratable value less than £12,000 will receive up to 100% rate relief.
Around 600,000 small businesses are expected to benefit from the scheme’s continuation, and the Chancellor declared that the 2015 Autumn Statement shows the government backs businesses of all sizes. However, he has decided to delay a full review of business rates until his next budget, which will not necessarily please larger corporations.
From a small business perspective, however, Retail Merchant Services welcomes the latest update. The potential cost of the relief scheme being dropped – more than £9,000 per SME – could have been devastating to the small business sector.
But, it’s still important for sole traders and SMEs to prepare for the fact that rate relief may not be extended beyond 2017. Increasing cash flow over the next 12 months will prove crucial to business growth; to put small firms in a stronger position should the programme be scrapped further down the line.
And smaller companies aren’t out of the woods yet; they will face another huge test over the coming months, when the national living wage comes into force on 1st April 2016.
Read our blog – is your business prepared for the national living wage? for more information on how to prepare.
SMEs avoid apprenticeship levy
Another point worth noting from the Chancellor’s speech is that the planned introduction of an ‘apprenticeship levy’ will not be applicable to companies paying less than £3million in wages – which we also welcome.
The government wants larger organisations to commit 0.5% of their total wage bill to training young workers, in order to increase the number of high quality apprenticeships available to school leavers.
Exempting SMEs from the levy will avoid the creation of a ‘two tier’ scenario, in which big business can attract and develop the skills of young talent, leaving smaller companies out in the cold.