Home Business News Red tape, spiralling costs and the VAT threshold are pressing issues for 5.5 million small businesses

Red tape, spiralling costs and the VAT threshold are pressing issues for 5.5 million small businesses

by Thea Coates Finance Reporter
19th Jun 24 1:05 pm

As the general election approaches, Insights from leading small business insurer Simply Business has revealed the most pressing issues within the sector.

The survey of 1,750 small business owners pinned access to finance, a stifling VAT threshold and ‘two tier’ approach to energy support as reasons for stagnation within the sector.

Almost a third (29.5%) of small business owners said the government had not done enough to support small businesses through the energy crisis, and that they should increase tax for oil and gas companies.

One in five (19.7%) felt more stringent regulation of oil and gas companies should be introduced, with reports earlier this year showing that over a quarter of SMEs spent up to 40% more in energy each month than in the previous year.

And almost a third (32%) said the small business sector needed more financial support, with over 40% stating that the government has not provided enough opportunities to win business funding and grants.

Less than 1% of respondents say they think the government has done enough to tackle the tax burden on small businesses.

Small business voting intentions revealed

Over a third (38%) of small business owners say Labour most represents the best interest of the UK’s small businesses. One fifth (22%) of respondents said they thought the Conservatives were most sympathetic to their situation, whilst 40% felt that neither of the biggest parties represented their interests.

Over eight in 10 (81%) small business owners said they would consider voting for another party if they thought their interests were being prioritised, leaving 4.4 million votes up for grabs.

Small business owners saw the government’s £5,000 increase on the VAT threshold in the Spring Budget as little more than a gesture with 63% stating that the VAT threshold needs to be increased beyond this.

Over a quarter said they thought it should have been increased to £100,000 and almost one in five (19.2%) said it should have been raised to at least £150,000.

Appetite for growth

SME owners also said the effects of reducing the cost of running a small business would have far-reaching benefits for the sector – and the wider economy, with almost a quarter (24%) saying they could expand their business, almost a fifth (18.9%) could develop more products or services, and 16% could hire more staff.

Bea Montoya, COO at Simply Business UK, said, “Small businesses are the beating heart of our economy and communities, and our research shows just how crucial they will be to July’s election result.

Party leaders now have an opportunity to appeal directly to the almost four and a half million UK small business owners who say they’d consider voting for a different party if it placed more importance on the needs of small businesses.

“Their message is clear: put small businesses at the centre of our economic plan by tackling their challenges head-on. In doing so, candidates will be appealing not just to our country’s SME owners, but to an extended pool of voters – the families of small business owners and those who rely on SMEs for their employment.

“The UK’s 5.5 million small businesses are an essential part of our collective economic stability. Their importance – and the power of their votes – cannot be underestimated.”

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