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Business rates and online taxes: how SMEs can manage the hit

The headwinds keep on mounting for small businesses. There will be no relief from burdensome business rates in the autumn Budget and the prospect of an online sales tax looms larger. Firms have to work out a way to manage the extra pressure on cashflow.

News that the government has again delayed reform of the business rates system is hardly a surprise but for stressed small businesses it is still a notable disappointment. The system has long been derided as out of date and regressive and a barrier to growth, including by the Federation of Small Businesses.

Notably, according to analysis of Office for National Statistics data by the Labour Party, 332,000 businesses are a risk under the current business rates system. It is calling for business rates discounts for small firms.

How the government deals with business rates remains to be seen, with reform not expected until some time in 2022. However, in the wake of the repeated delays relating to business rates reform, news has emerged that the idea of an online sales tax has been resuscitated, in part to create fairer conditions for independent high-street retailers.

Headwinds mounting for small firms as 2022 approaches

If an online sales tax is created, it is expected to be unveiled in the spring. Until then, much debate about its details, in particular who it will apply to, can be expected. Potentially, some small businesses could be looking at a year in which they are hit with both higher national insurance payments and a new online sales tax.

And unfortunately, the bills don’t stop there. More immediately, businesses are facing rising energy and fuel prices, as well as the prospect of Covid-19 loan repayments – a third of small businesses are worried they won’t be able to pay. If recovery and regrowth was already a daunting enough challenge, it seems that conditions aren’t going to get any less demanding in 2022.

So, how can small business owners manage cashflow in such a climate? Alternative lending services can help.

Rates, taxes and other bills and how alternative finance can help

With regard to alternative finance, in the wake of prolonged caution from traditional lenders, which is an issue that has returned during the pandemic, services such as invoice finance, asset finance and peer-to-peer lending, are proving a vital source of capital for small businesses, both for maintaining cashflow and for essential investment.

These facilities, which offer a more easily accessible and personalised approach to lending, are helping small businesses survive and target recovery and regrowth.

Furthermore, alternative lending is playing a prominent role in the government’s headline emergency support scheme, the Recovery Loan Scheme (open until the end of 2021). Invoice finance and asset finance between £1,000 and £10 million per business are available under the initiative. This profile is helping cement the reputation of alternative finance in the business sector.

Safeguarding cashflow and SME finance options

The delay to business rates reform and the prospect of an online sales tax is likely to further take the wind out of small business sails, but these firms will undoubtedly continue to push forward. To meet the challenges presented by the increased tax demands, higher gas and petrol prices and pandemic loan repayments, it is vital that businesses are aware of all the finance options available to them, including the services of alternative lenders.

To find out more about A&T Business Associates services, contact Steve Bowles on 01903 602211 or steve.bowles@atbusinessassociates.co.uk.

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