What Does the Mini-Budget Mean for Small Business

What Does the Mini-Budget Mean for Small Business

In building your own business, there are things that you have to prepare. Your website, physical store, or office, hiring employees that will be an asset to your business, and so much more. On top of that, there should be your business budget.

In today’s podcast episode, Annette will enlighten all of us about the news regarding the mini budget and what it means to small businesses.

Highlights of this episode:

  • The importance of a mini-budget for small businesses?
  • What has today’s mini-budget announced that is relevant to small business owners in the UK?
  • Are there any changes that will create an impact on small businesses?


Listen To The Episode

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I hope you are well today. Thank you for joining me. Hello, I hope you are well. Today I am speaking about what does the mini budget mean for small business and I clearly missed out the T in my heading at the bottom of the screen there. So it's going well so far, but I hope you are well today. Give me a hello in the comments, let me know that you are here. If you are tuning in, let me know. Give me a Hello, I'm going to add my T to the title and pop that back across for everyone who is joining and tuning in.

Hey, everyone, hello, hello, hello, we are alive across multiple platforms and also on multiple cameras. So apologies if I'm not looking directly at the camera that is looking at you or you are watching through. But I am live on multiple, on multiple devices, which is why that is.  And today I'm speaking about the mini budget that happened this morning. And what that means for small businesses in reality and giving you some commentary on, on my take on things for that.

So for those of you that don't know me if you are stumbling across some one of my channels or platforms, my name is Annette Ferguson, I am CEO of Annette and Co, a UK based accounting firm and I am a chartered accountant and certified Profit First professional. Predominantly my business helps other businesses and business owners take home more money from their business for them and their families to enjoy. And I'm going to say that today's mini budget hasn't really helped us in that mission. But we didn't really think it would either. 

What is the mini budget tax cut that was just announced in the UK?

So what has today's mini budget announced that is actually in any way relevant to small business owners in the UK. Well, we know that small businesses make up somewhere in the region of 61% of UK employers, we employ 61% of the UK workforce. So we are, as a group, the biggest employer in the UK by quite some way. Yet the announcements today have not really helped support that, have not really helped support small business owners who at this point in time are finding things challenging.

The recession coming to hit us, the increased cost of living, the inflationary pressures, increased costs of goods, of course, utility bills increasing and yes, there was a cap announced on business utilities, gas and electricity announced just a few days ago, but that cap is typically higher than most people have been paying historically, and therefore we'll still see an increase in bills and is only fixed for a six month period.

So not masses of support, a temporary, a temporary sticky plaster is probably the best way I could describe that. And even then it's not doing great because it's still higher than people were paying before. But the core of today's mini budget announcement was a massive series of tax cuts across the UK, the likes of which have not actually been seen since the 1970s. Huge, huge tax cuts. And unfortunately, whilst massive tax cuts on the face of it sound like a good thing for all of us, as humans, as people, you know, who wants to pay over the odds in tax?

No one, therefore, a series of tax cuts, that sounds like a good thing. But the problem is that this is the biggest tax cutting event like I said since the 70s since 1972, in fact. And that's when Barber's, what was termed as Dash for Growth happened and that ended quite frankly in disaster. And so we can only hope that history does not repeat itself when it comes to these tax cuts, a series of 45 billion pounds worth of tax cuts have been announced today. ‘’

Will these tax cuts really have an impact on small business owners? 

So which of these actually impact small business owners? Well, the first one is the corporation tax.  Now, not technically a tax cut, you won't see a drop in your corporation tax bills and that is because the reduction in corporation tax is not actually a reduction in the current rate of corporation tax. It is abolishing the planned rise in corporation taxes. So no change for businesses, including small business when it comes to your corporation tax bill.  No change when it comes to your VAT bill.

Now, when it comes to how you would usually pay yourself as a small business owner, most small business owners pay themselves of course, a smaller salary, and then dividends as the rest of the money they are taking out, no change there. No change to that setup. Now, if you are paying yourself through payroll, mainly through payroll, if the vast majority of your income is coming through payroll, if you're a basic or higher rate taxpayer through payroll, you will see a change.

If you live in England and Wales, not if you live in Scotland, because income tax is a devolved tax and therefore, changes to income tax made through this mini budget do not affect you in Scotland, do not affect me in Scotland. But if you are in England and Wales and you are paying yourself solely salary, you're not taking a low salary and dividend mix, if you're paying basic rate, then your tax will reduce from not 20% to 19%, so you will have a reduction in tax there.

Or if you are lucky enough to be paying the 45% tax rate that has been abolished, again, in England and Wales. But as we know, for the vast, vast majority of small business owners, this is actually irrelevant, because the vast, vast majority of small business owners don't pay themselves in this way. So for most of you, that's going to make zero difference. And the other tax that we need to look at that businesses pay is national insurance. So the National Insurance increase, which came in in April of this year, is now going to be abolished in November. 

So that is a tax cut that will affect however,  the - it was really only a seven month tax increase in that case. Nothing again to really write home about in terms of the impact on small business, and what that's going to mean for your business going forward. And that is really it. There has been in reality, no announcements today that are going to positively impact your business as a UK small business.  You might be able to benefit a little from the cap on utilities announced a few days ago. But like I said, the cap is higher than most people's typical bills have been historically, and therefore not putting people in an incredible position with regard to that. And so mostly there isn't, there is really nothing for, for small businesses to, to get excited about from today. And what that means in reality is that we're in the same place as small business owners as we were yesterday. 

What do small business owners need to focus on to become profitable?

And of course, as small business owners, we can't rely on the government to help support us and bail us out.  It is ultimately our business, it's ultimately up to us to be able to do that for our businesses, for our teams, for our employees, for our own livelihoods and for our own incomes. And we, you know, this is just another, another example of how it is down to us, it is down to us. And therefore, the fundamental rules still apply.

And those rules are to focus on revenue generation, and sales and delivering incredible value to your customers and clients. And keeping a control on costs so that you can be as profitable as you can, and take home money for you and your families to enjoy, so that you can have the longevity of running a business. Now, of course, keeping costs under control at this point in time is the biggest struggle and worry for most small business owners because costs are increasing.

We have high inflation. We have interest rates increasing and we are in recession. And that is the hardest part. I'm not saying that's an easy part at all, but it is fundamentally going to be up to us to work that out in our own businesses and work out what we can do with our profitability as well. So that is what the mini budget really fundamentally means for most small businesses. It really means not much change, unfortunately, to where we are just now. And I guess business owners most of the time, we kind of know that everything is up to us and that's still the same position today, as it was yesterday. 

So I hope this has been useful in just letting you know what has been happening today with the announcements and what effect they may or probably more likely may not have on you and your business. If you do have any questions, I'm always happy to answer those. You can always put a comment in the video, you can drop me a direct message, whatever works for you, I'm always happy to answer any questions and queries that people might have. I'm happy to cover those off. 

Whilst I'm on today, as well, I want to share with you that we are launching a new email newsletter, it's called The Friday Financial Freedom Finder. For most of you where you're watching, you'll be able to find a link to this in the description to this video. Not necessarily everywhere, however. But I put the link on the screen there for you too. It's annetteandco.co.uk/want-our-emails/, which we're hoping you find catchy.  

I should probably make it a little bit shorter than that, but that is it nonetheless. So if you do want to join our email list so that you can get some great content, exclusive content into your inbox every single Friday, then do make sure you go to that link, fill in your details and sign up for that. I hope that today's session has been useful. And I will speak to you all really soon. Take care everyone, have a great weekend. 

Thank you so much for tuning in today. I hope you got lots of value from this episode. Now if you're struggling with any accounting things for your business, I'd love to help make sure you reach out to me at podcast at annette and co dot co dot uk, that's podcast@annetteandco.co.uk and let me know how I can help. Of course, remember to subscribe to this podcast as well. Thanks again. 

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About the Author

Owner of Annette & Co. - Chartered Accountants & Certified Profit First Professionals. Helping online service-based entrepreneurs find clarity in their numbers, increase wealth and have more money in their pockets.

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