Blow for business owners as dividends hit, which is able to hurt entrepreneurs who pay themselves this manner
Help: Jenny Clark founded The Wild Times
Chancellor Jeremy Hunt was an entrepreneur himself, as he identified in his Budget statement three days ago. But not all of the measures he announced have been welcomed by small businesses.
Supportive measures include £13.6billion in tax cuts over the subsequent five years and a Government-funded ‘transitional relief scheme’, which Hunt said would profit around 700,000 businesses and mitigate the impact of next yr’s rise in corporation tax.
Yet there have been cuts to research and development (R&D) tax relief in addition to a cut to the dividend allowance which is able to hurt entrepreneurs who pay themselves this manner.
Small business owner Jennifer Brown, 44, welcomed news that the VAT registration threshold will likely be frozen at £85,000 because it means she’s going to not be obliged to pay more. She was also grateful for the rise within the Employment Allowance, which allows small firms to scale back their National Insurance contributions by as much as £5,000.
Yet the most important impact on her firm, Pampeano, which sells handmade Argentine leather goods, is the Budget’s impact on the worth of sterling. She says: ‘I import all the things from Argentina, so my biggest challenge is currency exchange rates between the US dollar and sterling. October’s mini-Budget by Kwasi Kwarteng tanked the pound and slashed my earnings. I’m so pleased we have now got people at the highest of Government who’re economically savvy and may possibly pull us out of the outlet we’re sitting in.’
Erin Moroney, owner of healthy snacks firm Nibble, is relieved the tax credit for research and development was not scrapped, but disenchanted it has been reduced. She says: ‘That tax incentive really encouraged businesses to do more research and development.
‘So it may curb the creation of more revolutionary products. For firms like ours, developing recent products on a regular basis, with the ability to claim that a refund was really helpful. There’s a whole lot of trial and error with food science, so it’s difficult to create recent products.’
Jenny Clark, 30, is a yoga teacher, paddleboard instructor and founding father of The Wild Times which arranges nature-focused retreats across the UK.
As Jenny is already seeing business sales decelerate, she had hoped for more help with the cost-of-living crisis. ‘It does make me query whether I can carry on doing what I do,’ she says. ‘Starting a business is difficult at the perfect of times and I do not think the Chancellor has got a grip on inflation.’
Business owners who pay themselves in dividends are set to be worse off, with the reduction within the annual tax-free dividend allowance from £2,000 to £1,000 next April – after which to £500 in 2024.
Michelle Ovens, founding father of campaign group Small Business Britain, says: ‘We welcome the announcements on business rates, particularly the rise to the rates relief available for the retail and hospitality sectors. It’s going to provide support for sectors on the front line of reduced consumer spending.’
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