Small businesses have seen a drop in confidence brought about by concerns about the global economy, changes to how dividends are taxed and the introduction of the new national living wage.
Government support is dropping
Seven out of ten entrepreneurs believe the government is effectively backing private enterprise, according to the latest quarterly Enterprise Index from accountants Smith & Williamson, which surveyed around 200 UK-based entrepreneurs.
However, that statistic marks a whopping ten per cent drop in just three months suggesting recent changes have been seen as unfriendly towards small businesses.
Changes concern entrepreneurs
These changes include the new tax on dividends, which will come in to effect next April. Under the new law, basic-rate taxpayers will have to pay tax on dividends for the first time.
The authors of the report say that changes like these have led to more businesses becoming disappointed in the government.
The dividend changes, combined with the increased national living wage means businesses will have to do more in order to prepare for the rising costs.
Entrepreneurs also flagged the changes to investment rules concerning venture capital trusts (VCT), which currently limit the amount of money a company can receive from a VCT to £15m.
“These VCT changes have been forced on us by the EU and they’re limiting the amount of money a business can raise for acquisitions and buyouts. While it’s been forced upon on the UK, the feeling is that perhaps the Treasury hasn’t been too terribly robust in its defence. It will slow the finance opportunities for companies and is not helpful,” said Guy Rigby, partner and head of entrepreneurial services at Smith & Williamson.
Tories still seen as the only option
However, despite some concerns, small businesses still overwhelmingly support the Tory government and say that the election of left-wing politician Jeremy Corbyn has not helped the Labour party’s credibility problems.
Mr Rigby said that some of Corbyn’s policies such as printing more money concern small businesses because they believe it could disturb the relatively stable economy.
People turn to alternative funding
The survey also revealed changing attitudes towards how businesses raise money. Nine out of ten entrepreneurs said they would be open to using a crowdfunding website to raise money. Smith & Williamson said that small businesses’ distrust of banks has elevated the importance of crowdfunding platforms.