After a six-week campaign filled with debate, the results are in, and Labour have achieved a landslide mandate in the UK 2024 General Election
While broadcasters, pollsters, and pundits had suggested that the election outcome was a foregone conclusion, the period has been uncertain for small businesses. The lack of detailed discussions on policy hasn't been helpful either.
Despite numerous cabinet changes under the Conservative government in recent years—including five chancellors and five business secretaries—small business owners have shown remarkable resilience and adaptability.
With a clear mandate from the general public, can Labour deliver the promised change and stability? Rapid movements are expected, as Labour plans to reform business rates, the British Business Bank, establish Great British Energy, and tackle late payments, amongst other initiatives.
A more detailed roadmap is anticipated in the King’s Speech on July 17 and the autumn budget later this year. In the meantime, let's delve into what has been stated and rumoured to help you and your business prepare for the upcoming months.
No Tax Rises (for Now)
Sir Keir Starmer has consistently stated that there will be no increases to income tax or National Insurance contributions, which will likely be welcome news for your employees.
Labour has also confirmed that corporation tax will be capped at 25%. This might support growth as small businesses can deduct capital investments, but the direct benefit will depend on your profits and business type.
Corporation tax can be complex, so it's advisable to review current and previous rates and allowances from HMRC. If confusion persists, detailed information from the Institute for Fiscal Studies or a financial advisor can be helpful. You can speak to our expert team here at Gow and Partners if you need any specific advice!
VAT Speculation
Regarding VAT, we enter the realm of speculation. Former Chancellor Jeremy Hunt raised the VAT threshold from £85,000 to £90,000, a move welcomed by many small businesses close to the VAT threshold. However, it’s unclear whether Labour will maintain this higher threshold as they explore funding options for their spending plans.
Support Against Late Payments
Late payments are a significant issue for cash flow. Labour plans to address this by requiring large businesses to report their payment practices in annual reports, aiming to expose and hold late payers accountable. This action is expected to “help unlock £20 billion in unpaid invoices,” easing pressure on small businesses and the self-employed.
Growth for Businesses Nationwide
Many businesses struggle to access funding and growth opportunities, especially outside London. Labour intends to reform the British Business Bank to better support and invest in small businesses nationwide. Specifics of this reform are yet to be revealed, but updates are expected soon.
National public contracts are also set to be reformed to give SMEs a fairer chance, ensuring at least one SME is on every public contract shortlist.
Labour aims to increase funding for small businesses in the tech and innovation sectors by introducing a Regulatory Innovation Office responsible for funding opportunities. Coupled with efforts to stabilize research and development credits, these actions are expected to benefit businesses in fast-growing sectors.
Revitalising High Streets and Business Rates
A common grievance is the disparity in rates between high street businesses and tech giants. Labour plans to replace the current business rates system with a new one to level the playing field. The details of this new system are yet to be revealed, but it promises to rejuvenate high streets.
Labour also commits to reintroducing more opportunities for in-person banking, benefiting those who rely on branch services, such as self-employed and cash-in-hand workers. These new banking hubs are expected to be rolled out swiftly, with regulatory changes to accelerate the process.
Stability in Energy
Business energy bills have surged recently, exacerbated by the Russia-Ukraine war. Labour’s flagship pledge is to establish Great British Energy, a clean energy company aimed at reducing bills and enhancing Britain’s energy security. Although immediate reductions in bills are unlikely, this initiative is one to watch and a key promise Labour will be measured against in the coming years.
A Closer Relationship with the EU?
Labour has indicated a more optimistic approach to Britain’s relationship with the EU. While specifics remain unclear, one manifesto promise is to boost small business exports by publishing a trade strategy in collaboration with the Federation of Small Businesses, aiming to remove barriers and improve efficiencies in UK imports and exports.
Set Yourself up for Success
Did you know that we run the highest rated accountancy firm in Blackburn with Darwen?
Book your 30 minute discovery call today— enjoy a relaxed, no-obligation chat with one of our qualified accounting advisors. We can assess your situation and determine how to best serve and add value to your business.
Alternatively, you can send us a message with any queries (big or small), and one of our team members will get back to you promptly.
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