Members of the UK200Group comment on the Smith & Williamson quarterly Enterprise Index results
Members of the UK200Group of independent accountancy and law firms have today commented on news that the latest Smith & Williamson quarterly Enterprise Index suggests that a lack of confidence in the global economy, changes to taxes on dividends and the introduction of the new national living wage have all contributed to a drop in confidence amongst small businesses. It found that 70% of entrepreneurs believe the government is committed to supporting private enterprise; a drop of 10 percentage points in three months.
Duncan Montgomery, tax partner at UK200Group member firm Whittingham Riddell, said: “Confidence is lower than it was, but dividend changes have not been understood and in fact for many they are more than compensated for with lower corporation tax rates. With proper planning at an early stage the dividend tax should not bite. On the ground businesses with a vision, and a growth model seem undimmed, those who are only trying to repeat last year plus a bit are the ones that are less happy.”
Jonathan Russell, partner at UK200Group member firm ReesRussell, said: “Small business believe that most tax changes of late have been to the benefit of large businesses rather than small businesses. Whilst headlining the cuts in corporation tax these only benefit larger businesses as the small company rate has not changed for many years and the reductions for small business are in the future. The impact of the living wage and auto-enrolment for pensions hits small business much harder because they do not have the infrastructure to deal with it which increases their operating costs to deal with the red tape. It is true that there are tax breaks for investment but these are of little use to businesses simply looking to earn a wage for their owners. The final straw is the change in the taxation of dividends which again has little impact on larger businesses because most small businesses look at their total tax burden on the business and on the proprietor rather than viewing them individually. It may be politically that UK needs to attract more large businesses but small businesses need assistance too.”