The Federation of Small Businesses (FSB) has called on the Government to back enterprise in the forthcoming Budget on 16th March by simplifying taxes, halting costly new policy initiatives and reforming business rates.

In its pre-Budget submission to Chancellor George Osborne, the FSB urged the Government to fortify small business confidence by backing enterprise consistently and clearly. A recently released quarterly survey by the trade group indicated that small business confidence is decreasing in the face of turbulent economic headwinds and a raft of new domestic policies that are scheduled to come into effect imminently.

FSB members, the group declared, are facing a series of significant challenges in the coming months that will increase burdens and ramp up costs. These include changes to the taxation of dividends, pension auto-enrolment and, from April, the introduction of the National Living Wage. Additionally, small firms are still struggling with an unreformed business rates system and are bracing themselves for the introduction of compulsory quarterly digital tax reporting.

Emphasising remarks made by Mr Osborne to FSB members at its Policy Conference three weeks ago, in which he pledged his support for small businesses, the organisation is now holding him to his word.

FSB Policy Director Mike Cherry said “In this climate, it’s crucial that the Chancellor uses the Budget to reassure small firms and boost their confidence so that they invest, create jobs and drive economic growth. This means no new major challenges that drive up costs and burdens. In addition, Mr Osborne must deliver on his promises to overhaul the business rates regime and simplify the tax system.”

An additional factor that SMEs will need to contend with from 6th April is the impact on their productivity and profitability as the result of another policy change. Ignoring industry advice, HMRC has decided to extend the definition of workers subject to “supervision, direction or control” (SDC) to include millions of contracting professionals, who have always hitherto been considered as entirely independent.

The changed definition treats these workers, for tax purposes only, as equivalent to employees of their end clients, sweeping away their existing entitlement to claim tax relief on the considerable travel and subsistence expenses they incur during their journeys to and from often-distant temporary workplaces.

Small businesses lack the resources to employ professionals with niche but often intensely needed skills on a permanent basis, turning to Umbrella Company Employees instead to come in on a temporary basis to complete vital projects or handle surges in demand.

From April, these contracting professionals are likely to stop servicing distantly located small businesses or hike up their pay rates substantially to compensate for their loss of income.

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