With the UK in limbo as it waits to see the political makeup of its next government, Business Advice takes a look at the small business policies that could be under threat after a disastrous general election outcome for the Conservative party.
The results are in and Britain has a hung parliament after the incumbent Conservative party failed to win the 326 House of Commons seats needed to form a majority government.
Designed to stamp out political opposition before Brexit negotiations begin in earnest, the snap election called for by the Conservatives less than two months ago has backfired, and Jeremy Corbyn’s Labour party has gained significant political territory.
As prime minister Theresa May scrambles to form an alliance with other political leaders before forming a new government, we take a look at some of the Conservative party’s small business policies that could now be in jeopardy.
How small business owners determined the many general election swing seats
Statutory workers’ rights
The uncertainty created by a hung parliament is likely to delay progress to legislate further statutory rights for workers, that were promised by the Conservative party in its election manifesto last month.
The Conservatives promised to increase worker representation amongst directors on the boards of UK companies, and grant all employees the right to receive vital information affecting their employer’s future.
A series of pledges also introduced more tangible measures for workers, such as a new statutory right for bereaved parents to have time off work, and a Brexit promise to guarantee current EU worker protections after Britain leaves the common market.
In the run up to the election, small business owners and workers remained in the dark about how some of these policies would work in practice, with many fearing the main consequence of new measures would be more red tape and administration. It is now more likely that small businesses will have to wait a lot longer for clarity on these issues.
Making Tax Digital
The rollout of Making Tax Digital – the government’s digital tax plan – which is set to increase the frequency of small business owners needing to file company taxes with HMRC to four times a year, could be delayed by the outcome of the election.
Until the Spring Budget announcement earlier this year, the much-talked about tax policy was due to be introduced for all small UK firms from 1 April 2018.
However, Conservative chancellor Philip Hammond promised in March to extend a one year grace period to certain small business owners before Making Tax Digital came into effect, in response to industry reports that found very few businesses would be capable of making the switch given the short timeframe.
The announcement meant that owners of unincorporated firms and landlords with annual turnover below the VAT threshold had until April 2019 to prepare for Making Tax Digital, and quarterly tax reporting.
Despite these efforts, the Conservatives have been blamed for not providing enough information to the millions of small and micro businesses that stand to be most affected by Making Tax Digital, and the initiative could now be one of the small business policies the party chooses to delay.
Full business rates review
Another 2017 manifesto pledge that may well be kicked into touch as the Conservatives deal with the fallout of the election result is a full review of the UK’s business rates system.
Business rates were revalued for the first time for seven years in April 2017, and massive tax hikes on premises, in London and the South East of England in particular, caused outrage amongst small company owners.
Responding to concerns, the government said it would bring in more regular business rates revaluations and implement a comprehensive, nationwide review of the system.
However, a timeframe has yet to be announced and the review has yet to take shape. With Theresa May now tasked with creating a workable government for Brexit, it is likely a review of business rates will be pushed down the agenda of small business policies.
Export vouchers
A minority Conservative government that’s fighting for credibility is far less likely to get behind progressive small business policies, like the idea for an export voucher scheme, or export tax credits.
First introduced by the government-backed Small Business Taskforce – a panel of industry leaders set up in 2016 to represent the interests of small UK firms on the international stage – export vouchers would offer first-time exporters a small subsidy to access advice on overseas trading.
Small business leaders have declared that there has never been a more critical time for UK companies to look outward and consider trading with the rest of the world, with initiatives like export vouchers presenting better opportunities to do so. But, with Brexit negotiations looming, a weaker Conservative government may not support the scheme.
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