31 Mar What Support Has There Been Nationally For SMEs ?
There has been a lot of change and instability in our economy over the last number of years with the Pandemic, adapting to the impact of Brexit and leadership changes within the Government which have started to settle at No. 10, but what support has been given by the Government to Small and Medium Enterprises in recent times ? We look back at the support announced.
Support to small and medium enterprises
In this year’s Spring Budget, the Chancellor announced a commitment to make the UK the best place in the world to start and grow a business. Some of this will be debated in the Finance Bill’s Second Reading taking place today.
Autumn Statement 2022
The Autumn Statement 2022 announced last November provided a multi-billion-pound national package of support for SME’s. This included a package of business rates support worth £13.6bn over the next five years for properties in England and included freezing the multiplier for 2023-24, targeting support for small businesses to support them at the revaluation and expanding the generosity of the Retail, Hospitality and Leisure relief scheme from 50% to 75% in 2023-24, subject to a £110,000 cash cap per business.
This package has been introduced to protect small businesses by limiting bill increases to a maximum of 5% or £600 for over 500,000 ratepayers next year as well as ensuring that 80% of Retail, Hospitality and Leisure properties will see bills fall or stay the same, providing support to the UK’s high street businesses.
Seed Enterprise Investment Scheme
The Government also announced an expansion of the Seed Enterprise Investment Scheme to further incentivise investment in very early-stage UK companies from April 2023.
Annual Investment Allowance
In addition to this, there was also confirmation that the Annual Investment Allowance would be set at £1m permanently meaning that UK SMEs can offset 100% of the cost of their investment in plant and machinery against their taxable profits in the year of investment leading to a tax cut of up to 25p for every £1 invested for those SMEs operating in the corporation tax system. The Annual Investment Allowance amounts to full expensing for both main and special rate investments.
Spring Budget 2023
The Spring Budget announced mid March added further to the substantial package of existing support. The Spring Budget focussed on the UK labour supply challenges identified by businesses across the country. The measures announced around labour supply, migration, Flexible Working, Childcare Support, and helping Universal Credit Claimants increase their earnings, is aiming to help support businesses by delivering the workforce they need to expand and grow. In the near future, there will also be an expansion of a pilot Occupational Health subsidy scheme to help UK SMEs with the cost of purchasing Occupational Health services.
The Government announced a range of administrative changes to make it easier for businesses to interact with the tax system, including a systematic review of HMRC guidance and forms for small businesses. The Chancellor also announced additional tax relief for loss-making R&D intensive SMEs, who will be able to claim relief at a higher rate of 14.5%, benefiting 20,000 UK SMEs a year.
Other support announced by the Government in 2022 included an extension of the Recovery Loan Scheme until June 2024, providing UK businesses with up to £2m of government guaranteed finance. There was also action to reduce the burden on regulation for tens of thousands of SMEs.
From 3 October 2022, the presumption of exemption was extended from businesses with fewer than 50 employees to those with fewer than 500, for new regulations and retained EU regulations as they are reviewed. Regarding retained EU Law, the Retained EU Law (Revocation and Reform) Bill is currently going through its Parliamentary passage. It will end the special status of ‘retained EU law’ and ensure that it can be easily amended or removed. It will accompany a major cross-government drive to reform, repeal and replace outdated retained EU law, that will aim to cut £1bn of red tape for UK businesses, ease regulatory burdens and contribute to the Government’s mission to unite and level up the country.
Energy Support Extension
The Government announced two significant packages of energy support for UK businesses. Initially, the six-month Energy Bill Relief Scheme provided a discount on wholesale gas and electricity prices for businesses until 31 March 2023 and this was in January this year by a further 12 months, until March 2024 providing further support to SMEs up and down the Country.
Made Smarter Adoption and Help to Grow
The Government have supported SMEs through the Made Smarter Adoption and Help to Grow: Management programmes to help increase their productivity. Made Smarter Adoption was allocated £24m and provides a combination of tailored advice, financial support and leadership training to help manufacturing SMEs in several English regions adopt advanced digital technologies, while the Help to Grow: Management programme enables SME leaders to access management training delivered through leading UK business schools, alongside 1:1 support from a business mentor.
Start Up Loans
In addition, the Government supported UK entrepreneurs through the Start-Up Loans scheme which delivered more than 101,000 loans, providing more than £950m of funding to entrepreneurs. There was also been support via the British Business Bank with funding opportunities for 33,000 loans over the SR period.
National Insurance Contributions
The National Insurance Contributions (NICs) Employment Allowance was increased from £4,000 to £5,000 in April 2022, meaning that any UK businesses with employer NICs bills of £100,000 or less in the previous tax year can claim up to £5,000 off their NICs bill. This means the smallest 40% of businesses pay no National Insurance at all.
Small Profits Rate
From April 2023, the Small Profits Rate will keep the rate at 19% for companies with profits of £50,000 or less meaning 70% of companies will see no increase in their Corporation Tax rate this April.
The UK also has a higher VAT registration threshold than any EU member state and second highest in the OECD – which keeps the majority of UK businesses out of VAT altogether.
The Government continues to invest in 38 Growth Hubs providing businesses across England with free one-to-one support and advice. Growth Hubs offer a triage, diagnostic and signposting service to make sure that all businesses, whatever their size or sector, know what help is available and can access the most appropriate support.
Support through the Pandemic
Throughout the pandemic, the Government provided an unprecedented £22.6bn in support to protect impacted businesses across England. It is worth noting that micro, small, and medium sized businesses received 95% of the funding value, totalling £21.3bn. These grants included: The Local Authority Discretionary Grant Fund, The Small Business Grants Fund, Retail, Hospitality and Leisure Grant Fund, The Additional Restrictions Grant, and the Omicron Hospitality and Leisure Grant. All of which were open to applications from eligible SMEs.
Coronavirus Job Retention Scheme, CBILS and Bounce Back Loan Scheme
Support was also provided through the Coronavirus Job Retention Scheme which helped support over 7.6m employee jobs for businesses with below 250 employees. The Government also introduced a collection of loan guarantee schemes to support SMEs, including the Coronavirus Business Interruption Loan Scheme, and the Bounce Back Loan Scheme. Together these schemes collectively approved over £72bn worth of finance through more than 1.6m facilities.
Bounce Back Loan Scheme, which targeted small and micro business, the average loan was £30,000 whilst under Coronavirus Business Interruption Loan Scheme, which was targeted towards medium sized businesses, the average loan was worth £150,000.