As expected, the Autumn Statement was bruising for small businesses, with the beleaguered sector coming under attack from various angles. So, how should these firms plan for a future that holds tax rises and yet more pressure on cashflow?

Small firms bear the brunt of the Chancellor’s balancing act

Unfortunately, the latest fiscal statement from the latest Tory government held few surprises for small businesses as the Chancellor was true to his word on wanting to “balance the books”, except for the news on business rates. Going somewhat against the grain, the 50% discount for retailers, leisure and hospitality has been extended to 75%, albeit with a cap, and the planned rise in business rates has been scrapped.

However, that was a rare bright spot for small businesses, with tax rises the order of the day. Among the widely labelled stealth tax raids include a freeze on the VAT threshold, which will mean higher bills for companies that increase their income in the coming years, as well as brutal cuts to dividend tax allowance, a freezing of national insurance thresholds and cuts to the Annual Exempt Amount for Capital Gains Tax.

In addition, it was announced that the National Living Wage will rise by almost 10% in 2023. While the increase is necessary given the way in which inflation and prices are rising, and the help required by low-paid workers, the move will heap yet more pressure on small businesses at a critical time.

Then there is the Energy Bill Relief Scheme. Concerns relating to the short time span of the scheme were barely assuaged: a vague promise of reformulation after April 2023 was made, with the rather ominous note that support will be less generous thereafter. Such planning puts the news that the idea of an online sales tax has been binned firmly in the shade.

Surviving the Statement and how alternative finance can help

It has been a rollercoaster few months for small firms and the latest fiscal statement is a blow to owners that are battling unprecedented headwinds and a relentless attack on cashflow and liquidity. Planning ahead, already difficult, now becomes even more challenging. The introduction of the latest measures and the outlook that they have now helped to paint mean that planning around access to capital is absolutely critical. This is where the services of alternative lenders can help.

In the wake of prolonged caution from traditional lenders, which is an issue that has returned during the pandemic and amid challenging market conditions in 2022, services such as invoice finance, asset finance and peer-to-peer lending are proving a vital source of capital for small businesses.

These facilities, which offer a more easily accessible and personalised approach to lending, are helping small businesses survive and target recovery, stability and growth. Notably, alternative lending has played a prominent role in the government’s headline emergency support schemes, including the Recovery Loan Scheme. This profile has helped cement the reputation of alternative finance in the business sector.

Safeguarding cashflow in 2023 and small firm finance options

This time there was no U-turn from the Tory government and the Autumn Statement largely delivered what was expected for small businesses. The forecast for the sector, already tough, has got even more challenging. As such, when it comes to fiscal planning, it is important that firms are aware of all the finance options available to them, including the services of alternative lenders.

To find out more about A&T Business Associates services, contact Tony Hedger on 01903 602211 or tony.hedger@atbusinessassociates.co.uk.