Behind the headlines - what does the spending review actually mean for small businesses?

Spending Review – what does it mean for small businesses?

At the end of November, in what is effectively his fourth budget speech in less than 12 months, Chancellor George Osborne announced his 2015 Spending Review. This included important developments that will have significant implications for small and medium sized businesses.

While the headlines focused on the Government’s U-turn on tax credit cuts and protecting police budgets, there was some welcome news for business owners.

Spending Review: Implications For SMEs

? Small business rate relief scheme – this will be extended until April 2017, a move that Chancellor George Osborne claimed means around 405,000 of the smallest businesses will get 100% relief from business rates, with a further 200,000 benefiting from tapering relief.

? Business rates – are to be kept by local authorities, offering councils the potential to make some areas more attractive by offering cheaper rates. “Elected mayors will be able to raise rates provided they are used to fund specific infrastructure projects supported by the local business community,” said Osborne.

? Apprenticeships – A new business-led body will set standards for apprenticeships. A new ‘apprenticeships levy’ will come into effect in April 2017, at a rate of 0.5% of an employer’s pay bill. There will be a ￡15,000 allowance which means that the vast majority of employers will pay no levy. (This development however has been described by some critics as a new payroll tax).

? Enterprise zones – There will be 26 new enterprise zones created. This will include 15 zones in towns and rural areas across the country.

? Transport investment – Capital spending on transport will increase by 50% to a total of ￡61 billion. Osborne said: “It means the construction of HS2 to link the northern powerhouse to the south can begin. The electrification of lines like the TransPennine, Midland mainline and Great Western can go ahead. London will get an ￡11b investment in its transport infrastructure.”

View From Inspira’s Sue Higgins

“On the whole, I welcome the Chancellor’s announcements. The developments on business rates and the announcement of increased capital investment in the transport infrastructure, is likely to affect our clients the most.

“While the extension of small business rates relief by another year is very welcome, both for start-ups and existing, established businesses, it is perhaps a little disappointing that business owners will need to wait until next year’s budget for the much-needed overhaul of business rates. I would, of course, like to see the Chancellor go further and provide more tax breaks and support for business owners, particularly at a time when business costs are rising. That said, the abolition of uniform business rates, with the prospect of cheaper rates in some areas is very welcome.

“The investment in the transport infrastructure is a definite positive which will help not only our clients in the transportation and logistics sector but all businesses that need to move people and/or goods around the country. This will improve efficiency, reduce costs and ultimately help businesses to grow and prosper.”