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The Conservatives win a majority – what does the result mean for small businesses?

4-minute read

Sam Bromley

Sam Bromley

17 December 2019

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The Conservative Party won a majority at the general election on 12 December. Here’s what Boris Johnson’s government could mean for your business.

The Conservative Party manifesto made a number of promises to the UK’s small businesses. While it’s too early to say how those pledges will translate into reality, what should we expect from the new government?

An end to Brexit uncertainty?

The Conservative manifesto promised:

  • to help Britain’s small and medium sized businesses become exporters and “seize the opportunities” Brexit will bring

It’s more likely than ever that the country will leave the EU on (or before) 31 January. After that, attention will turn to the future relationship with the bloc.

But in the short-term, businesses will want the new government to provide clarity on Brexit.

As Carolyn Fairbairn, from the Confederation of British Industry, said: “The starting point must be rebuilding business confidence, and early reassurance on Brexit will be vital. Firms will continue to do all they can to prepare for Brexit, but will want to know they won’t face another no deal cliff-edge next year.”

Restoring small business and self-employed confidence

The Conservative manifesto promised:

  • we should do everything we can to support those who want to start their own company, strike out on their own, and have an idea that grows into a world-leading business

The Conservative manifesto said that the party will “launch a review to explore how we can better support the self-employed.” They said this includes “improving their access to finance and credit (not least mortgages), making the tax system easier to navigate, and examining how better broadband can boost homeworking.”

The Conservatives have also promised to clamp down on late payments, expand start-up loans, and review business rates (more on this below).

But small businesses and the self-employed will want to see these promises turn into policies as a way to restore confidence after an uncertain few years.

Mike Cherry, Chairman of the Federation of Small Businesses, said: “The restoration of small business confidence and trust in politics rests on seeing the Conservatives’ pledges to us swiftly enshrined in a programme for government. It’s now time to turn kind words on bread and butter issues facing the small business community into tangible action.”

A review of business rates

The Conservative manifesto promised:

  • we will cut the burden of tax on business by reducing business rates. This will be done via a fundamental review of the system

During the election campaign, the Conservatives outlined plans to overhaul the business rates system to help create thriving high streets.

They pledged to increase the business rates discount available to businesses with a rateable value below £51,000 from 33 per cent to 50 per cent in 2020-21.

They also plan to extend the discount to “grassroots music venues, small cinemas and pubs.”

The changes to business rates would only apply to England as Scotland, Wales and Northern Ireland set their own business rate regimes.

But This is Money reports that the discount is set to last for just one financial year. And the precise details of the ‘fundamental review’ aren’t entirely clear – we may need to wait until the new government’s first Budget announcement. This is expected to be in February or March, after the Autumn Budget was cancelled because of the snap election.

Helen Dickinson, chief executive of the British Retail Consortium, said: “The Prime Minister must fulfil his manifesto pledge and urgently begin a fundamental review into the broken business rates system.”

A review of the off-payroll working rules

The Conservatives promised:

New off-payroll working rules for the private sector start from April 2020. If you’re a contractor, this means your larger clients will be responsible for determining your IR35 status (read more about IR35).

But the change has proven to be controversial. And while the Conservatives didn’t mention IR35 specifically in their manifesto, they committed to reviewing the rules after both Labour and the Liberal Democrats said they would, if elected.

Chris Bryce, CEO of IPSE, said of the IR35 review: “To truly support the self-employed, this government must also halt the changes, which are due in April, while a full review is carried out. Time is short: the new Conservative government must act now to protect this vital sector.”

But with the changes still scheduled for April 2020, contractors and small businesses alike should continue preparing. Carolyn Walsh, of employment intermediary CWC Solutions, told ContractorUK: “Assuming that the Tories’ promise is kept, contractors still shouldn’t hang their hopes on a review”.

The Conservatives and your money

The Conservative manifesto promised:

  • not to raise the rates of income tax, National Insurance or VAT

The manifesto went on to say that the Conservatives will raise the National Insurance threshold to £9,500 next year – they said this would be a tax cut for 31 million workers. They want to make sure that “the first £12,500 you earn is completely free of tax – which would put almost £500 per year in people’s pockets.”

The Institute for Fiscal Studies (IFS) calculated that the National Insurance pledge would be worth about £85 a year for those with earnings above £9,500 a year.

And if you have employees, Chancellor Sajid Javid has committed to raising the National Living Wage to £10.50 an hour within the next five years.

But again, precise details of changes may have to wait until the next Budget announcement.

Investment in skills and training

The Conservative manifesto promised:

  • to help employers invest in skills and look at how to improve the working of the Apprenticeship Levy

They also said that they would create “a new National Skills Fund worth £3 billion over the next Parliament. This fund will provide matching funding for individuals and SMEs for high-quality education and training.”

The chief executive of the Association of Employment and Learning Providers, Mark Dawe, said: “As a matter of urgency, the February budget and next spending round must ensure that the amazing apprenticeship opportunities are equally accessible for all organisations, no matter what their size, which will also help reverse the decline in the participation of young people and first step apprenticeships that have been hit so badly since the introduction of the levy.”

Is there anything you would like to see the new government do for your business? Let us know in the comments below.

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Sam Bromley

Written by

Sam Bromley

Sam has more than 10 years of experience in writing for financial services. He specialises in illuminating complicated topics, from IR35 to ISAs, and identifying emerging trends that audiences want to know about. Sam spent five years at Simply Business, where he was Senior Copywriter.

We create this content for general information purposes and it should not be taken as advice. Always take professional advice. Read our full disclaimer

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