The forthcoming Budget must further relax business taxes and minimise the growing risk of closures and redundancies across SMEs, warns Azets, the UK’s largest accountancy and business advisory firm for SMEs and top 10 accountancy firm. Azets has an office in London and 20+ offices across the South East.
David Jenkins, Tax Partner in the Azets London office, said:
“SMEs are the backbone of the UK economy and they are being starved of cash. We urge the Chancellor to use tax relief to help businesses retain cash flow. Without cash, a business cannot survive and there are too many businesses now in that position. There is already a cash flow crisis which is threatening the backbone of our economy and, unless tackled urgently, will trigger the closure of many otherwise sound businesses. The Chancellor last year introduced a raft of measures that protected businesses and prevented mass unemployment, however, many businesses that are now mothballed, such as those in the hospitality sector, are still having to maintain buildings, pay insurance and finance debt.”
Azets has outlined eight essential tax reductions and reliefs that would provide SMEs with the cash and the time they need to survive into 2022 and beyond:
● Extend the 5% VAT hospitality rate to all VAT registered businesses
● Encourage investment by doubling the annual investment allowance to £2m
● Support start-ups with a 10% Corporation Tax on turnover up to £500,000
● Encourage recruitment by reducing employers NIC to 12% (currently 13.8%)
● Support youth recruitment with employers NIC rate of 10%
● Encourage investment in technology with 200% capital allowances up to £1m
● Support entrepreneurship by maintaining lifetime relief at £1m
● Reduce corporation tax to 15% (currently 19%)
“A perfect storm is looming in the next few months when furlough comes to an end and banks start demanding repayment of loans that were deferred under the repayment holiday scheme. Banks will also look to recover CBIL and BBLs loans arranged last year.
“Time and cash are the key to prevent the large number of distressed businesses becoming closed businesses. The economy needs the Chancellor to go further with support measures, and the most effective way is to ease business taxes. It means further Government borrowing, but it is a necessary and vital intervention.”