Updated: Feb 9, 2019
We all know costs seem to just be getting bigger and bigger each year and a recent study by the FSB (Federation of Small Businesses) seems to back this. Apparently, we’re spending more than ever on the requirements placed on us by Government policy, including business rates; auto-enrolment; Insurance Premium Tax; corporation tax; employer NI contributions; the apprentice levy; minimum wage rates; vehicle excise duty and the climate change levy. Wow, what a list!
In fact, the research commissioned by the FSB shows that VAT-registered UK small businesses are collectively spending £60,000 (15%) more than six years ago on these areas, with the construction sector being worst hit with these rise in costs. That sector has seen a 28% increase. And these extra requirements come at a cost; small firms each lose an average of £5,000 and three working weeks a year to tax administration and paperwork alone, according to the research.
Despite some welcome announcements in the October Budget, these extra costs sees the UK fall from fourth to ninth place in World Bank’s Ease of Doing Business index.
Mike Cherry, FSB National Chairman, said: “Come the beginning of April 2019, small firms will not only have Brexit day, but also Making Tax Digital, rising employer auto-enrolment contributions and further business rates hikes. This will be a flash-point for a lot of businesses, one which could threaten the futures of many.
“Small employers have played a massive role in securing record-high levels of employment. Maintaining these levels means providing more support for the small and mid-sized firms that are hit especially hard by policy-linked costs – particularly where staff are concerned. Clearly, the burden placed on business owners as they grow their workforces needs to be looked at.
“Mitigating spiralling employment costs through further enhancement of the Employment Allowance while reforming outdated aspects of the tax regime – not least business rates – would be a good place to start.”