Tax cuts are high up on the small-business wish list when its comes to the 2024 Budget. This is hardly surprising given the pressure on cashflow, but is there other reform that firms should be pushing for?

What 2024 Budget reforms are small businesses targeting?

Will this be the last Tory budget for a decade? Small business owners probably don’t care – what they are focused on is the possibility of tax cuts and costs relief that will ease the burden on their resources and profit margins.

Tax-cut targets for small firms include increases in the Employers Allowance, from £5,000 to £6,500, and the VAT threshold, from £85,000 to £100,000. Several small businesses groups are lobbying for these changes, arguing that they would give firms more room for growth. And then there are calls to reform business rates – a regular plea at Budget time.

Away from tax cuts, the ability to address labour shortages is another key issue for small businesses, with calls to introduce tax credits for firms training workers and to reform the 2017 Apprenticeship Levy, which is widely considered to be failing to deliver on its original mandate. Also, once again, making childcare more affordable is another main ask.

In addition, groups are calling for more incentives to switch to net zero, underlining the cost-related issues that small firms are having with regard to sustainability-led development and the adoption of greener practices and policies.

Businesses are also asking for a reduction in compliance costs, as means to reduce pressure on cashflow and free up capital for investment, and for a new tax-free shopping scheme to drive tourist spending in the retail and restaurant sectors.

What is missing from small firms Budget 2024 lobbying?

The make-up of the small-business Budget wish list leaves little doubt as to the pain points afflicting the sector, but given this focus, are firms missing something?

The continued retreat of traditional banks from business lending raises questions about the access to finance firms need to help them take advantage of any benefits from the Budget, in particular in relation to funding new growth.

Following on from the news that 65% more SMEs are experiencing difficulty in accessing finance from high-street banks, a report has revealed that 140,000 SMEs had their accounts closed by high-street banks in 2023. This growing pressure on small firms comes at the worst possible time.

As such, should small businesses be asking the Chancellor to do more to address access-to-finance issues, including further promoting alternative finance services?

Services such as invoice finance, asset finance and peer-to-peer lending are proving a vital source of capital for small businesses in the current funding climate. These alternative finance facilities, which offer a more easily accessible, affordable and personalised approach to lending, are helping small businesses survive and target recovery, stability and growth.

This profile has helped cement the reputation of alternative finance in the business sector, with a new 2024 study showing that more and more SMEs are turning to alternative lenders to access larger-scale finance packages.

Small firm finance options: 2024 Budget and beyond?

The list of small business sector wishes for the 2024 Budget makes for interesting reading. It is hardly surprising to see them pushing hardest for measures that ease the pressure on cashflow and give them the room to better target growth goals.

And it is for this reason that lobbying should also include steps to ensure that firms can access the finance they need to grow, in particular with traditional lenders proving increasing reticent in this respect. In this area, action should include calls for further raising awareness of all the finance options available, 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.