‘Small businesses need more help to reach responsible business goals’

As the government’s Recovery Loan Scheme for businesses draws to a close, a new survey published today reveals many small businesses across the UK are keen to reach their responsible business goals – but they need more support from the government to do so whilst trying to stay afloat. 

The survey of 1,973 small business owners was carried out by YouGov on behalf of Informi – the website for small business owners and start-ups, powered by AAT (Association of Accounting Technicians) – prior to the recent announcements on cost of living changes by the Chancellor Rishi Sunak. 

It shows that two-thirds (67 percent) of small businesses would support the provision of tax reliefs for SMEs undertaking specific activities or investing in specific areas, known as ‘social offsetting’. 63 percent would also welcome free training in specific areas, such as management skills, digital skills and finance, to improve productivity. Additionally, 72 percent believe tax relief for work-related training would help their small business and 60 percent said they supported tax incentives to meet net zero carbon obligations.

However, the survey found that small businesses are also in need of more immediate support. When asked which policies would help their small business now, many favoured earlier interventions, such as lower National Insurance contributions (46 percent), lower Corporation Tax (39 percent) and wider availability of cash grants (25 percent). By contrast, just 15 percent wanted clearer, long-term incentives to meet net zero obligations, whilst 14 percent said greater access to training would help them in the short term. Over half (52 percent) of those surveyed would also welcome a windfall tax on energy companies.

Adam Harper, Director of Professional Standards & Policy, AAT, said: “These results show that many small businesses need more support to invest in longer-term goals – such as meeting net zero obligations and increased training opportunities – benefiting not only individual employees and small businesses, but also the economy as a whole. However, following the events of the last two years, the UK’s small businesses are still under immense pressure simply to survive. As a result, whilst many are keen to take advantage of these opportunities, they do not necessarily have the time to explore them in the current circumstances.

“This means that SMEs are missing out on the scope to deliver business improvements, particularly in those instances where they are restricted from accessing options that are available due to strict eligibility criteria.

“It’s clear that the government needs to take a step back and examine how support for SMEs could be improved by reforming the tax system to include incentives for these longer-term aims, as well as providing more direct relief. This would help to reduce costs to small businesses who want to implement targets in these areas, whilst freeing them up to focus on day-to-day operations.”

AAT recently published a new report, ‘Time for Change’, outlining a broad series of tax reform proposals to support the creation of a fairer and more effective tax system – many of which were well received by the survey respondents. The top three ideas SME owners would like to see introduced were a windfall tax on energy companies (52 percent), abolishing inheritance tax (45 percent) and introducing ‘social offsetting’ tax breaks for companies that behave responsibly (41 percent).

Additionally, one-third (32 percent) of respondents would welcome a long-term tax strategy to help businesses plan for what is coming, while 31 percent thought a simple, one-page tax return for all employees should be introduced to encourage accountability, understanding and engagement with the tax system. However, only 17 percent felt business rates should be replaced with a land tax. 

“Our Time for Change report aims to spark a national debate about how to tackle inequality and unfairness in the UK tax system and give both taxpayers and HMRC better value. In response to this, we’re aware that small business owners want to see a fairer system where they are rewarded for not only the hard work they put into running their businesses on a daily basis, but also for doing the right thing in terms of social responsibility – and to see this echoed across the board. SMEs have dealt with numerous changes in recent years and a more stable system would help to deliver this. Additionally, it would enable small business owners to focus on recovery and ensure they continue to thrive, both now and in the future,” Harper continued.

AAT has long championed the role of small businesses in the UK economy and supports opportunities to help their growth. Last month, AAT’s Adam Harper gave evidence to the Business, Energy and Industrial Strategy Select Committee¹ on how to make the government’s Help to Grow schemes for SMEs more accessible to improve skills and productivity.

Additionally, AAT is part of a coalition of industry partners on the Net Zero Accountancy Initiative, which supports small businesses in the accountancy profession to reach net zero carbon emissions. Informi, AAT’s website for small businesses and start-ups, also provides practical support and advice to small businesses through its website, newsletters and online courses.