Businesses optimistic for 2015

There is plenty of reason for small and medium sized enterprises (SMEs) to be optimistic in the run-up to 2015, with the government’s autumn statement providing additional support and several studies suggesting business confidence.

Autumn statement and business

• A review has been ordered of the out-of-date business rates system. Many organisations and people, including our own Managing Director Gareth Evans have petitioned the government to reform. The rate rise has also been limited to 2%
• Small Business Rate Relief is being extended for another 12 months and a £1,000 discount will be available to high street shops.
• The Funding for Lending Scheme is being extended until January 2016 with a further £500 million to lend to small businesses.
• £400million is being provided through the British Business Bank’s Enterprise Capital Funds programme, which invests in fast growing small and medium sized businesses.
• A £45 million package was announced to boost exports to emerging markets and support first time exports.
• The government is encouraging businesses to employ apprentices, by removing national insurance contributions for apprentices under the age of 21.

Funding confidence

A poll for Liberis found that 40% of small and medium sized businesses intend to ask for funding next year. Half plan to approach their bank and 31% will seek backing via alternative lenders. Most (75%) of the thousand firms surveyed are confident they’ll get the money they need.

However, almost a third of traders questioned (30%) said they wouldn’t be looking for funding, because they don’t believe they would get it.

Export optimism

78% of traders questioned for an Open to Export study think that next year will be better than 2014 for exports. Of the 400 people polled, only 3% think 2015 will be worse. The most popular export markets were Europe and North America (59% and 44% respectively), which is unsurprising, since 34% said cultural similarity to the UK affected their decision on where to export.

Business growth

According to the most recent CAN Capital Small Business Health Index:

• 38% are planning to expand or try new activities to market and advertise their business.
• 35% intend to buy further equipment.
• 41% think that mobile and/or online reviews will have the biggest impact on their business, followed by online shopping at 34%. Despite this, 39% have not optimised their website for mobile. 
• 34% said rising staff costs were the largest threat to the growth of their company, with the greatest obstacle to hiring cited as being able to offer a competitive salary.

Minor win with EU VAT ruling

Designed to prevent tax avoidance by large online corporations, a new EU VAT ruling brings substantial changes for firms that sell digital products in Europe. Currently, if a business sells below a certain threshold, it is exempt from paying VAT. From the 1^st January, all companies that sell in other EU countries will have to pay VAT in that country, even if they are below the UK VAT threshold.

To ensure they are VAT compliant, they will need to either register for VAT in every country they sell to or register for the HMRC’s Mini One Stop Shop Scheme (VAT MOSS). The latter will involve a quarterly return and originally meant they would then be liable for UK VAT. However, the HMRC has tweaked the ruling so that affected businesses can avoid paying VAT on their UK sales – a small, but significant win for micro and small businesses.