Sandra Rowley at card payment solutions provider takepayments.com
This week the Chancellor announced his 2021 Budget, but what does this mean for small businesses? Whilst there is some welcome news in the budget, the overall business environment will remain challenging for small, independent businesses in the UK.
Firstly the announcement of the national living wage increase, while workers were pleased to hear of a pay rise, for SME’s this is another cost challenge to running their business.
On top of the increase in costs for energy bills and petrol, the rise of inflation and the confirmed national insurance increase, a 6.6% pay increase would require business owners to pay out an additional £1,000 per year for minimum wage full time workers.
According takeapayments business trends report one in four (28%) small business owners think the government should offer them extra support to help cover this increase. This extra support could help businesses continue to contribute to the struggling economy.
British high streets rely heavily on small businesses and the high street index report revealed how suburban high streets are thriving following on from consumer spending habits changing to shopping local and communities supporting small businesses since the pandemic.
The announcement of the £150million pot of funding to make angel investors available to businesses outside of London and the South East is a breakthrough for small businesses.
Investment in new businesses shouldn’t be dependent on where the business is based. High streets up and down the country rely on small businesses so this kind of investment will not only allow start-ups to grow to levels they wouldn’t have been able to, but it could also will contribute to boost the economy for town centres up and down the country.
There’s no questioning that the hospitality sector has been the hardest hit sector throughout the pandemic, with restrictions only finally being lifted on 19th July as well the Brexit fall out creating staffing shortages across the board.
The announcement of the alcohol tax cut worth up to £3billion and cancelled planned duty increase on alcohol will be welcomed by small independent businesses across the hospitality sector, as one in two businesses state had to use the furlough scheme which highlights these businesses need as much financial support as they can get to help them bounce back to pre-pandemic levels.
The 50% discount on rates for retail, hospitality and leisure businesses of up to £110,000 for one year will also be hugely welcomed by these industries as they continue to claw back their recovery from the pandemic following months of hardship due to national lockdowns.
The the new investment relief rate will also make a difference to small businesses, allowing owners to make property investments and pay no extra business rates for 12 months. This will allow businesses to invest in their buildings whether it’s new security systems or creating a greener work environment.
The takepayments business trends report revealed one third (33%) of SME owners said they have noticed their customers caring more about sustainability therefore, this new investment will give businesses the opportunity to invest in green infrastructures such as solar panels which not only aligns with values of consumers, but will help reduce running costs and build greener businesses.
While there are areas within the budget that will help ease the strain on business owners, the fact that inflation is expected to rise to a staggering 4% over the next year, the cost of living will continue to rise and the national insurance rate is increasing, it’s fair to say it is going to be a tight financial year for many SME’s.