What will the general election mean for small businesses?

 In Small Businesses & Startups

Small businesses must prepare for disruption thanks to the impending general election.

It will delay the implementation of various small business initiatives (both welcome and unwelcome). The result will also define small business policy for the next five years.

Prime Minister Theresa May called the snap election on 18 April, with the public set to vote on 8 June.

Major parties are yet to publish their manifestos. But small businesses owners can estimate the effect of this election. Read on to find out more.

Brexit uncertainty

The backdrop to the general election is Brexit. This has proved a divisive topic for small business owners, as it has for the rest of the country.

The Prime Minister has openly stated her desire to land the majority she needs to push through her plan to leave. This has been dubbed ‘hard Brexit’.

Some small business owners believe a hard Brexit will help to cut restrictive red tape. It may also provide opportunities to take advantage of a weakened pound. Others have already scaled back investment plans because of factors including fears over trade opportunities and increasing costs.

The election will decide whether the UK goes for hard Brexit, or attempt to stay in the single market under renegotiated terms.

Delayed policy implementation

As the result of the announcement of a general election, many policies will face delays. These include:

Dividends

Chancellor Philip Hammond announced two new policies as part of the Spring Budget that met with a less-than-lukewarm reception from small business owners:

  • Increased National Insurance contributions
  • Changes to how dividends are taxed

The former was quickly dismissed, while the latter has been put on the back-burner. This would have seen tax-free allowances on dividend income fall from £5,000 to £2,000.

Making Tax Digital

Another delay welcomed by small business owners concerns Making Tax Digital.

The proposal was removed from the Finance Bill 2017, although commentators expect it to re-emerge later on – potentially under a different guise.

With all political resources now dedicated to the election, Making Tax Digital now looks some way off on the horizon.

Business rate relief

Changes to business rates have already had a severe impact on small businesses, with some facing hikes of up to 152%.

There have been calls for the government to soften the blow for small businesses, with one politician even describing the circumstances as a “ticking time bomb”. In response, the Government promised to set up a £3.6bn transitional fund to help the small businesses worst affected.

The changes came into force in April. It had been hoped that the initial relief package – worth £300m (The Guardian) would be in place within weeks.

However, while the means of implementation has been decided, the Department for Communities and Local Government has stated that the next government will have to put these plans into force. This means it’s likely that there will be delays of several months for hard-pressed small business owners.

No one knows for sure what this election will bring. But, by keeping these points in mind, you can put yourself in the best possible position to ride out the turbulence.

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