The announcement of the snap election earlier this year put business owners under further pressure after an uncertain 2016, dominated by the EU referendum. The challenge has been how to effectively respond to a changing political and business environment. It is impossible to predict the future, but it can also be dangerous to wait and see what happens before making any plans. Ahead of the election, we look at some of the key manifesto promises that may give an indication of what’s around the corner for businesses
There will be changes to Corporation Tax whoever takes power on 8th June. The Conservatives are maintaining their pledge from the recent budget to reduce this to 17% by 2020. The Liberal Democrats, positioning themselves as the direct opposition, promise to reverse all current and planned Conservative tax cuts, meaning that they aim to keep the rate at 20%. The Labour Party plan to raise the rate of Corporation Tax and while the Green Party make no direct mention of it, their policy pledge of a ‘Robin Hood tax’ on high value financial transactions suggests perhaps they would be more likely to increase the rate rather than cut it.
All the parties seem to be making a clear distinction between large corporations and SMEs. In their manifesto, the Conservative Party outline plans to simplify the tax system for the self-employed and small businesses; they are also seeking to reduce the administrative burden across the board with a “one in – two out” rule on new regulations. The Labour Party are similarly looking to reduce this burden, excluding SMEs from quarterly reporting and highlighting a lower “small profits” rate of corporation tax for smaller organisations. The Liberal Democrats make few concrete promises in this area, but pledge to review business rates and regulations and reduce the burden on smaller firms as a priority for future cuts.
There are some common threads which suggest possible changes on the horizon regardless of the election result. Tax avoidance is one of these. The Labour Party promise a £6.5bn robust tax avoidance programme; the Liberal Democrats and the Conservative Party both also promise to crack down on tax avoidance although neither lay out a clear programme or offer a price tag for this. Late payments are another issue with cross-party support; the Conservatives promise to enforce the Prompt Payment Code and only allow organisations with a record of prompt payments to bid for government contracts. The Labour Party offer further support for SMEs in this area, with plans to deliver a system of binding arbitration and fines for persistent late payers.
All the parties are pledging an improvement in connectivity. The speeds promised and timelines for delivery vary, but all the parties recognise the vital role that broadband will play in supporting the British economy. They are also all looking to invest in the physical as well as the digital infrastructure of the country, promising a range of road and rail improvements.
Brexit casts a long shadow over all the manifesto promises. The Conservative Party aim to institute nine regional overseas posts known as Her Majesty’s Trade Commissioners to champion exports from the UK. They set out ambitious plans for their expected trade agreements with European countries and new deals across the world and promised better business service provision in rural areas. They have also pledged to work directly with SMEs more, with 33% of all government spend on outsourced projects to go to SMEs. In contrast, the Labour Party is going with an industry-led approach rather than a geographical one, suggesting strategic councils modelled on the Automotive Council for industries of strategic importance. Exports are shown as a priority, with plans outlined for the development of an International Trade White Paper and championing SME exports by supporting market access initiatives, including a tradeshow access programme to help SMEs reach customers round the world. As well as promising a second vote on the Brexit deal, including free trade and movement, the Liberal Democrats also plan to promote investment. They aim to expand the British Business Bank to provide equity capital for medium-sized businesses and seek to develop a local banking sector dedicated to SMEs.
Ultimately, we will have to wait and see what happens at the polls on the 8th June, but it’s interesting to note the areas of agreement in this bitterly-fought contest. All parties claim to be tough on tax avoidance, all promise less red tape, more connectivity and a better infrastructure and claim to be in the best position to negotiate a deal on Brexit. Whatever the outcome, and whatever side of the House of Commons these parties end up on, these are clearly the most important issues and challenges facing business owners in the coming years.
By Sheen Stickland Chartered Accountants, http://www.sheen-stickland.co.uk/