As the UK prepares for the autumn statement on 30 October, Purbeck Insurance Services has underscored the critical need for the government to reaffirm the permanency of full expensing for small and medium-sized enterprises (SMEs). This tax measure, which allows businesses to offset the full cost of new IT equipment, plant, and machinery against their tax liabilities, is seen as vital for encouraging long-term investment and economic stability.
Todd Davison, Managing Director of Purbeck Insurance Services, noted that uncertainty surrounding the future of full expensing has raised concerns among business owners. Although the previous government had declared full expensing as a permanent policy, skepticism has arisen, particularly in light of recent research suggesting that the policy’s economic benefits might be overshadowed by potential revenue losses to the Treasury. Davison is calling for Labour to clarify its commitment to making full expensing a lasting feature of the tax landscape, stating, “Permanent should mean permanent.”
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Impact of CGT on investment
Alongside the call for full expensing, Davison highlighted the potential implications of Capital Gains Tax (CGT) changes in the upcoming budget. He warned that a blanket increase in CGT could deter investors from backing small, growing companies. Higher taxes on investment returns might dissuade those willing to take risks, further complicating the investment landscape for SMEs.
The importance of alternative investment
In addition to tax reforms, Purbeck Insurance Services welcomes the British Growth Partnership proposed by the British Business Bank, aimed at unlocking alternative investment sources for SMEs. Davison indicated that most applications for personal guarantee insurance at Purbeck come from businesses that have secured funding from alternative lenders. Facilitating access to such financing can play a crucial role in supporting the growth of small enterprises.
Stability in corporation tax
Purbeck is also seeking assurance on Labour’s pledge to cap corporation tax at 25%. This commitment is viewed as essential for providing certainty and encouraging business investment. A stable corporation tax rate would allow SMEs to better plan their finances and invest in growth.
Enhancing financial education
Finally, Davison stressed the need for improved education regarding loan facilities available to small businesses. Many SMEs lack awareness of the diverse finance options at their disposal, and targeted educational initiatives from the government could help them navigate these choices more effectively.
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By GlobalDataConclusion
As the autumn statement approaches, the emphasis on permanent full expensing, along with clear tax policies and enhanced access to investment, will be critical for the future of the UK’s small business sector. Purbeck Insurance Services advocates for decisive action that will bolster SME confidence and drive economic growth.
