As the Chancellor prepares to deliver a package of economic measures in the upcoming Autumn Statement, new data from small business lender iwoca reveals that tax cuts are the top priority for SMEs.
When asked what support they would like the Chancellor to announce in the Autumn Statement, nearly half (46%) of SME owners surveyed said they want to see tax cuts targeted at small businesses.
With a dip in energy prices reported in October, the call for tax cuts comes out ahead of an energy price cap for businesses (40%). A third (32%) of SMEs also called for an extension of the small business rate relief scheme.
SME growth remains stagnant
Calls for tax cuts come as SME growth has remained stagnant over the past year, with just a third (34%) of businesses reporting growth in 2023, and more than a quarter (28%) shrinking.
Of those who saw revenue fall, nearly half (47%) reported that this was due to lower consumer demand for their products. Two fifths (40%) of SMEs blamed rising business costs for their falling revenue, after a year of high inflation.
Impact of Government support
Against the backdrop of economic disruption in the last year, SMEs have not felt the benefit of government support. While one in four (26%) of SMEs say the Government has supported SMEs in the last year, fewer than one in five (18%) said that government support was sufficient for their business in 2023.
Overall, two fifths (42%) of SMEs say government support in the last year has been insufficient for their business.
Christoph Rieche, iwoca CEO, said: “SMEs have shown incredible resilience amid a cost of living crisis which has affected consumer spending habits.
“The message from SMEs to the Chancellor is clear – cut tax and protect us against potential spikes in energy costs to help us trade through this uncertain economic environment.”
Alex Rocha, owner and Managing Director at technology business The IT Partnership, said, “There are 5.5m SMEs across the country, and we are the ones driving jobs and economic growth and the resultant societal benefits.
“I’ve experienced the impact of Government decisions on my own business and within the SME business groups I work with. A mixture of targeted tax cuts and incentives must be included in next week’s Autumn Statement to both support but also stimulate ambitious SMEs to scale their growth and innovation.
For tech companies like ours, the Chancellor needs to look at research and development incentives, as well as targeted skills funding. Equally, for the companies we work with, particularly those who depend on a presence on the high street, cuts to business rates are vital.”
