February 2024: Ahead of the Spring Budget, Purbeck Personal Guarantee Insurance a business on the frontline supporting small business owners as they struggle to secure finance, has set out a wishlist for the Chancellor. Purbeck’s data shows that the owners of small businesses are under more pressure than ever to put their personal finances up as security for a business loan. Applications for Personal Guarantee Insurance (PGI) were up 68% in 2023 and over 45% of loans which required a personal guarantee in Q4 2023 were for unsecured loans, typically taken with alternative lenders. This is the highest level the business has recorded, supporting the latest data from Iwoca suggesting alternative lenders are stepping in where high street lenders are stepping back from small business lending.
Todd Davison, MD of Purbeck Personal Guarantee Insurance, says:
“Tax cuts seem to be out of the equation now the U.K. is in recession. However, we believe the Chancellor will be keen to show that the Government is focused on boosting employment and encouraging investment which are important ingredients required to stimulate growth and to build a stronger economy.
“Raising the VAT threshold would positively impact economic growth. The VAT threshold is currently £85,000 which was set in April 2017. Some businesses may take measures to keep their turnover below this new level to avoid the need to register for VAT, aiding growth in UK businesses.
“Further simplification of Capital Allowances would assist more UK businesses, encourage investment and stimulate growth. The introduction of permanent full expensing in the Autumn Statement only applies on plant and machinery but we need to see further measures to simplify the capital allowances legislation.
“The reforms to state benefits may create additional financial headroom for tax cuts, reduce unemployment rates and boost growth. This could also tie in with incentives by the Government for individuals to return to work and re-train.
“Vocational training vouchers should be explored for workers who wish to be reskilled and for employers to receive tax benefits for employing and training staff in desirable sectors or skills (such as sustainability, technology, health etc.). A consultation is needed on reduced National Insurance Contributions for returning workers and retraining funding for vocational qualifications.
“Changes to income tax thresholds; the first since 2022, would also be welcomed given taxpayers have been subjected to fiscal drag over the last 18 months.”
Purbeck would also encourage the Chancellor to consider the following measures to support small businesses:
Holistic strategy to support business transition away from high-cost energy:
The development and publication of a holistic approach to transitioning the U.K. away from high-cost energy. Small businesses are susceptible to market price fluctuations and current subsidies offered are not sustainable and place a burden on the U.K. taxpayer. Initiatives are needed to help businesses plan for energy consumption with a focus on renewable and green technologies.
Encourage businesses to undertake sustainable investment:
A Government supported tax scheme to encourage businesses to move to green technologies. This could be introduced by way of tax relief for investment in green plant and machinery as part of the U.K.’s commitment to Net Zero. Companies who have achieved Net Zero could pay a lower corporation tax than those that have not. There could also be a ‘Buy British’ condition to obtain additional reliefs which would help to encourage positive multiplier effects.
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Change tax relief rules for Landlords
A reversal of Section 24 giving landlords the ability to set the full amount of mortgage interest against rental income, before tax is calculated. This would help stop private landlords leaving the rental market, creating a dearth in supply, pushing rental prices up for tenants.
Notes to Editors
About Purbeck Insurance Services
Purbeck Insurance Services is a Personal Guarantee Insurance specialist supporting Small and Medium sized Enterprises (“SMEs”) and promoting business confidence
Insurance policies backed by Markel International Insurance Company Limited (“Markel”), an A-Rated insurer, as rated by A.M. Best (A), Fitch (A+) and S&P (A). Markel is a shareholder in Purbeck Insurance Services.
Purbeck Insurance Services is directly authorised and regulated by the Financial Conduct Authority
Insurance is underwritten by Purbeck Insurance Services, an authorised Managing General Agent (“MGA”) of Markel
Purbeck Personal Guarantee Insurance is annual insurance policy that provides Director(s) with insurance cover in the event their business lender calls in the Personal Guarantee (provided by the Director(s) as part of raising business finance)
Key features of Personal Guarantee Insurance:
- Premiums are competitively priced and based on individual circumstances
- Cover is available for Personal Guarantees signed to support a wide range of business finance facilities
For further media information please contact Alison Reeson at HSL on 07876 597466, or [email protected]
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