Support for small businesses

The Budget announcement clearly shows that innovation, productivity, and economic growth are at the top of this government’s priorities. While the chancellor’s 6 per cent increase in the main rate of corporation tax will come into imminent effect in the new financial year, he has avoided increasing the burden for smaller businesses and those generating the lowest profits. For those who are impacted, there will be a cash squeeze from the increased rate, but this will likely

take time to filter through and materially impact investment decisions.

Nevertheless, for UK businesses concerned about the impact this increase will have, especially in light of the current inflation levels, cost of living impact, and interest rates, now is the time to plan ahead. This includes looking at cash flow forecasting, reevaluating future investments strategically, and thinking about downside protection for their business. Automation and outsourcing will play a key role here, allowing organisations to be flexible and streamline operations where possible, and keep operating costs as low as possible.

Businesses of all sizes, but especially SMEs as the foundation of the UK economy, need to take greater advantage and make complete use of the existing government grants and schemes, such as the new full capital expense research and development tax relief. It will be interesting to see how the 12 new “investment zones” will help to stimulate growth through tax incentives, offsetting the effect of the headline increase in corporation tax.

The more the government can support SMEs through these schemes, the more empowered they will be to focus on business innovation and productivity, which directly impacts economic growth.

Michael Cox CFO at IRIS Software Group