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Tax
Support small businesses

We will continue to support small businesses through business rate relief and low taxation, and by reducing the bureaucracy and regulation that prevents small businesses from flourishing.

Our Verdict

The term ‘small business’ is not clearly defined, but the standard definition of ‘small and medium sized enterprises’ (SMEs) is any business with fewer than 250 employees (‘micro-businesses’ have 0-9 employees). According to statistics from December 2018, there were 5.7 million SMEs in the UK in 2018, which was over 99% of all businesses.

This promise to support small businesses highlights three areas of activity:

  1. Business rate relief
  2. Low taxation
  3. Reduced bureaucracy

Business rates are a tax placed on business properties. Some properties are eligible for discounts from the local council, also known as business rates relief. Small businesses saw can get a rate relief if their property rateable value is less than £15,000 and if the business only uses one property. In April 2018 business rate rises were changed to be in line with the (lower) Consumer Prices Index (CPI) measure of inflation, not the Retail Prices Index (RPI). Then in the 2018 Budget 2018 the government announced that small businesses businesses with a rateable value of £51,000 or less will have their bills cut be cut by a third over two years. And there was even better news for owners of public toilets, for whom business rates were scrapped completely.  These changes probably quality this part of the promise as ‘done’.

Looking at their “low taxation” part of the promise, we also know that the government remains committed to reducing corporation tax to 17%, which is due to take place in 2020. There is, however, a degree of subjectivity to this, as you could argue that taxes don’t have to fall if they are already considered to be “low” – in which case this aspect of the policy would be fulfilled simply by not increasing taxes. We’ll get opinion on this from organisations representing small businesses, as well as by comparing business tax rates in the UK with those in other countries.

Looking at the final aspect of this policy – “reducing the bureaucracy” – it’s a little harder to find evidence for anything having changed since June 2017. We’ll be referring to independent organisations for a view on this too.

In the meantime, given the promise to protect the drop in corporation tax  and and cuts to business rates, it’s fair to say this is ‘in progress’. Follow this policy for updates.

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