Lack of government support frustrates entrepreneurs » SMEInsider

Lack of government support frustrates entrepreneurs

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.

  • brianm101

    Strange no mention of new pension and the associated administration costs that SME will be picking up in the next year or so, a new cost for any SME employing someone.
    Sadly things are becoming loaded against those that want to start up and run their own business.

    • Hi Brian, thank you for your comment. What you said is very true, how do you think the auto-enrollment process is affecting SME owners?

      • brianm101

        Its not just the increase in the payroll cost, its the paper work and time wasted in dealing with this – Setting up a suitable scheme dealing with employees who may or may not want to join etc. Then repeating at intervals. Yes its not impossible or that hard, but its something else in the ever increasing work load.

        The most annoying thing is none of it is necessary, all the government had to do was increase National Insurance, to cover the cost of a better state pension. Which at the end of the day is the only one you can really count on (well nearly!).

        Suspect the scheme is more about the Pension industry getting their own way.

        • Do you not think that the auto-enrolment scheme has its benefits? It could encourage more people to work for SMEs.

          I agree with you that there are problems with the system, but shouldn’t it be something that’s expected of small business owners to do? Why do you think that some employees may not want to join?