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The General Election 2017 Guide for UK Small Businesses

The General Election 2017 Guide for UK Small Businesses

The General Election 2017 Guide for UK Small Businesses

It’s important as a small business to be able to plan for the future. With the general election just 9 days away, today we look at the party manifesto’s to see what they are offering for small businesses in the UK over the next five years. How will the economic and business environment change for you? We have looked at the policies most likely to affect small businesses and hope you will find this useful in anticipating the likely impact on your business in the coming years.

            

Tax

The Conservative Party are pledging:

  • To keep taxes “as low as possible.”
  • No increases in VAT.
  • Raise the personal tax allowance to £12,500 for basic rate payers and £50,000 for higher rate payers by 2020.
  • Review and reform the business rates system, with more frequent revaluations. Continue to support small businesses with business rates relief and low taxation.
  • Cut Corporation Tax to 17%.
  • Legislate for tougher regulation of tax advisory firms.

The Labour Party are pledging:

  • No increases in personal National Insurance or VAT.
  • Corporation tax rate will rise to 20% for small businesses and to 26% for larger ones.
  • Income tax rate of 45% on incomes above £80,000 and 50% above £123,000.
  • A review into reforming council tax and business rates, in favour of options such as a land value tax.
  • Reform business rates – switch from Retail Price Index to Consumer Price Index inflation indexing, exempt new investment in plant and machinery from valuations, and ensure businesses have access to a proper appeals process.

The Liberal Democrat Party are pledging:

  • Corporation tax will be 20%.
  • Reforming corporation tax to develop a system that benefits the smallest businesses and consult on shifting away from a profits-based corporation tax to one that takes account of a wider range of economic activity indicators, such as sales and turnover.
  • Raise personal income tax rate by 1% at each rate (20% to 21%, 40% to 41% and 45% to 46%)
  • Raise employee national insurance threshold up to same level as income tax threshold, over time.
  • Consult on how to set a living wage across all sectors.
  • Reverse planned cuts to capital gains tax.
  • Ensure those with the highest incomes and wealth are making a “fair contribution.”
  • Create a new ‘start-up allowance’ to help those starting a new business with their living costs in the first weeks of their business.
  • Review and reform business rates, prioritising reforms that recognise the development of a digital economy. Consider implementing a land value tax. Seek to reduce burden on small firms and make them priority for any future tax cuts.
  • Remove Capital Gains Tax and dividend tax relief, and refocusing entrepreneurs’ relief.

Deficit

(NB: The deficit is the difference between government spending and taxation over a 12 year business cycle. If a political party is planning to pay it off quicker, then they will either need to raise taxes more or cut spending more).

The Conservative Party are pledging:

  • Pay off the deficit by 2025.

The Labour Party are pledging:

  • Pay off the deficit by 2022.

The Liberal Democrat Party are pledging:

  • Pay off the deficit by 2020.

Immigration

The Conservative Party are pledging:

  • Reduce net migration levels to below 100,000 (from 273,000 last year).
  • Double the Immigration Skills Charge (from £1000 to £2000). NB: This is a charge on companies who employ workers from outside the EU.

The Labour Party are pledging:

  • Freedom of movement will end when Britain leaves the European Union.
  • No cap or target on immigration.
  • Stop overseas only recruitment practices and increase prosecutions of employers not paying minimum wage.

The Liberal Democrat Party are pledging:

  • Support the principle of freedom of movement between the UK and EU.
  • Allow high-skilled immigration to support key sectors of the economy.

Brexit and Trade

The Conservative Party are pledging:

  • Leave the single market and customs union, while seeking a “deep and special partnership” with the EU. NB: the customs union is an area where the EU countries have agreed a common set of tariffs on trade with non-members. The single market is an area where there is freedom of movement of goods, services, capital and workers, as well as common regulations and standards on things like product safety.
  • Try to replicate all existing EU free trade agreements and transfer into law the trade agreements entered into during our EU membership.
  • Seek to promote exports by creating a network of trade commissioners in 9 overseas outposts and reconvene the Board of Trade.
  • Ensure that small businesses are able to identify the right markets and sectors to win vital contracts abroad.

The Labour Party are pledging:

  • Scrap the Conservatives plans for Brexit and replace them with a fresh set of negotiating priorities with an “emphasis on the single market and customs union”
  • Do not accept the possibility of a “no deal” scenario with the European Union
  • Work with devolved governments to create integrated trade and industrial strategy to boost exports and investment.
  • Ensure future trade deals include a commitment of small businesses having access to foreign markets.
  • Develop an export incentive scheme for small businesses and ring-fence trade-show access programme grants for small businesses.
  • Include regional representatives on overseas trade missions.
  • Seek to retain unrestricted free trade with EU.

The Liberal Democrat Party are pledging:

  • Hold a referendum on the final Brexit deal, with the option to remain in the EU.
  • Stay in the single market and customs union.
  • Support the principle of freedom of movement between the UK and EU – the right to work, travel, study and retire abroad.

Employment Law

The Conservative Party are pledging:

  • Raise the National Living Wage to 60% of median incomes by 2020 and then increase in line with median incomes from then on. Analysis suggest this will mean a wage for over 25’s of £8.75 an hour by 2020.
  • Maintain EU employment laws.
  • Promises to take action on the “gig economy” of self employment and workplace protections” but will wait for the results of the review by Matthew Taylor before setting out what changes will be made.
  • A statutory right to a year’s unpaid leave to care for a relative, statutory leave for parents whose child has died and a statutory right to training.
  • Continue to extend auto-enrolment to small employers and make it available to the self-employed.

The Labour Party are pledging:

  • Minimum wage of £10 an hour by 2020 for all workers over age of 18.
  • End to zero hours contracts and unpaid internships. Ensure those working over 12 hours a week are entitled to a regular contract.
  • 4 days extra bank holidays a year (one for each nation).
  • “Clamp down on bogus self-employment” and extend rights of employees to all workers – including shared parental pay.
  • Abolish employment tribunal fees.
  • Give all workers equal rights from day one, whether part-time or full-time, temporary or permanent.
  • Trade Unions – repeal the Trade Union Act 2016, roll out sectoral collective bargaining (agreements between business and trade unions on issues like wage rates, that will affect all workers in a sector of the economy), guarantee trade unions a right to access workplaces and enforce all workers rights to trade union representation at work. Only give government contracts to companies which recognise trade unions.
  • Shifting the burden of proof, so the law assumes a worker is an employee unless the employer can prove otherwise. This is to deal with the “gig economy.”
  • Create a new Ministry of Labour.
  • Banning payroll companies, sometimes known as umbrella companies, which create a false structure to limit employers’ tax liabilities and limit workers’ rights.
  • Giving employment agencies and end-users joint responsibility for ensuring that the rights of agency workers are enforced.
  • Set up a dedicated commission to modernise the law around employment status.
  • Consult on introducing statutory bereavement leave.

The Liberal Democrat Party are pledging:

  • An extra month of parental leave for fathers.
  • To defend social rights such as maternity leave.
  • Stamp out abuse of zero-hours contracts, create a formal right to request a fixed contract and consult on introducing a right to make regular patterns of work contractual after a period of time.
  • Scrap employment tribunal fees.
  • Champion the Northern Powerhouse and Midlands Engine initiatives.
  • Modernise employment rights to make them fit for the gig economy, looking to build on the forthcoming Taylor report.
  • Strengthen enforcement of employment rights, including by bringing together relevant enforcement agencies and scrapping employment tribunal fees.

Business Regulation

The Conservative Party are pledging:

  • To reduce online VAT fraud.
  • Pass a Great Repeal Bill to convert all EU rules and regulations in British law.
  • Regulate more efficiently, saving £9bn through their Red Tape Challenge and the One-In-Two-Out Rule. NB: The Red Tape Challenge is a government scheme in which businesses can tell government about any regulations they think should be removed. The One in Two Out Rule is a rule where any new regulation that is introduced has to be accompanied by a removal of regulations worth twice the cost to businesses.

The Labour Party are pledging:

  • Replace the “Great Repeal Bill” with an “EU Rights and Protections Bill” that will ensure no change to workers’ rights or environmental protections.
  • Scrap quarterly reporting for businesses with a turnover of under £85,000.

The Liberal Democrat Party are pledging:

  • Reform the Regulatory Policy Committee to reduce regulations on business and create more certainty around future regulation.

State Support

The Conservative Party are pledging:

  • 33% of purchases by central government will come from small businesses by end of the parliament.
  • As part of the industrial strategy, explore how government can do more to support innovation by small and start-up firms.
  • Use government buying power to ensure big contractors comply with the Prompt Payment Code a code of practice on paying suppliers promptly) in their dealings with other businesses.
  • Work with post office to ensure all routine small business banking services should be available in rural post offices.

The Labour Party are pledging:

  • Create a new national investment bank and regional development banks in every region to identify where other lenders fail to meet the needs of SME’s and prioritise lending to them.
  • Tackle late payments by using government procurement to ensure anyone bidding for a government contract pays its suppliers within 30 days and develop a system of arbitration and fines for persistent late payers in private and public sectors.

The Liberal Democrat Party are pledging:

  • Support fast-growing businesses seeking to scale up, through the provision of mentoring support.
  • Expand the activities of a state-owned British Business Bank to tackle the shortage of equity capital for growing firms and providing long-term capital for medium-sized businesses.
  • Require the major banks to fund the creation of a local banking sector dedicated to meeting the needs of local small businesses.
  • Address the barriers to finance faced by small creative businesses.
  • Purchases by central government will aim to promote local growth and community development by buying from diverse sources and using local labour, goods and services, and encouraging local government to do the same.
  • Encourage local authorities and local enterprise partnerships (LEPs) to work in partnership with existing business, universities and other business hubs to develop plans for building on already established success in a particular area, including the ability to raise money to incentivise clustering by businesses with particular specialisations.

Energy and Infrastructure

The Conservative Party are pledging:

  • A cap on energy prices.
  • UK should have the lowest energy costs in Europe, both for households and businesses.
  • Smart meters offered to every household and business by the end of 2020.
  • Deliver road, rail, airports and broadband that businesses need.
  • £170 billion national productivity infrastructure investment by 2020.
  • Consult on how to extend the safeguard tariff cap (an energy price tariff created for low income families) to micro-businesses.
  • Every home and business to have access to high speed broadband, and work to provide giga-speed connectivity to as many businesses and homes as possible. Have major fibre spines in over a hundred towns and cities with 10 million premises connected to full fibre by 2022.
  • Mobile phone coverage to 95% of UK by 2022 and all major roads and train lines have wifi and mobile signal by 2022. Majority of the population covered by 5G by 2027.

The Labour Party are pledging:

  • Create a National Transformation Fund that will invest £250bn over 10 years in upgrading the economy.
  • Introduce an immediate emergency energy price cap to ensure the average dual fuel household energy bill remains below £1,000 per year.
  • Deliver universal super-fast broadband availability by 2022.
  • Expand provision of free public wi-fi in city centres and on public transport.
  • Ensure all urban areas, major roads and railways have 5G coverage.

The Liberal Democrat Party are pledging:

  • £100bn package of additional infrastructure investment including road and rail.
  • Install hyper-fast, fibre-optic broadband across the UK. £2bn to ensure the provision of high-speed broadband across the rural UK. Prioritise roll out to small businesses.
  • Aim to double the number of SMEs participating in the digital economy by supporting ICT capital expenditure by businesses in non-digital sectors.
  • Pass a Zero Waste Act which will include incentives for businesses to improve resource efficiency.
  • Aim to reduce energy bills by encouraging small scale local energy production and tougher energy efficiency standards for buildings.

Childcare

NB: We have included this as it affects the ability of parents to work when they have young children as well as return to work after maternity leave. It therefore has cost implications for small businesses.

The Conservative Party are pledging:

  • 30 hours of childcare for three and four year olds.

The Labour Party are pledging:

  • Overhaul existing childcare system and extend 30 hours of free childcare to all two year olds.

The Liberal Democrat Party are pledging

  • Extend free childcare to all two-year-olds and to the children of working families from the end of paid parental leave.

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