Mid-Year Roundup: SME Finance News

It’s a big world out there, and there are a lot of important events happening that may have a significant impact on your small business. By staying aware of these events, you’ll be able to put plans in place to avoid any problems — and to make the most of any opportunities.

Below, we’ve provided a roundup of some crucial news stories affecting SMEs in 2024. We’re looking particularly closely at finance news: economic changes and updates that could affect your sales revenue and expenses. Read on to discover the top SME news stories of 2024.

 

A Positive Spring Budget For Small Businesses

The 2024 Spring Budget brought many changes for small businesses, most of which were welcome after tough financial conditions over the last few years. We’ll dive deeper into other changes mentioned in the budget later in this article, but here are a few headlines that you should know:

• Value-Added Tax (VAT): Starting 1st April, 2024, the VAT threshold rose from £85,000 to £90,000. A higher threshold allows small businesses to reach higher revenue levels before having to register for VAT.
• Fuel Duty: The tax rates on fuel will stay frozen until 2025, a continuation of the lower prices that businesses have enjoyed since 2022. As well as benefiting transport-based SMEs directly, the freeze will indirectly benefit many other industries by lowering commuting and delivery expenses.
• Alcohol Duty: Hospitality businesses will benefit from a similar freeze in alcohol duty, so the lower taxes on all alcohol products will continue over from Autumn 2023 into February 2025.

 

New Issues From Brexit Continue to Arise

Even though Britain’s exit from the European Union was finalised more than four years ago, new problems continue to arise. This year, the big problem is new food and drink import fees, which could cost UK SMEs up to £2 billion in additional taxes (according to financial services giant Allianz).

Instituted on the 30th of April, these increased expenses could have a significant impact on the cash flow of UK-based small businesses that rely on food imported from the EU. The fees, which have been implemented by the UK government, are related to health and hygiene certifications for medium and high-risk animal and plant foodstuffs.

 

Free Childcare Extend For Working Parents In England

Another positive outcome of the 2024 Spring Budget was a significant increase in the amount the government is investing in childcare, specifically the free childcare available to working parents. This applies to self-employed business owners as well as employees.

Previously, those with 3 and 4-year-old children were eligible for 30 hours of free childcare per week, and those with 2-year-olds were eligible for 15 hours. Starting in September 2024 (with applications opening on May 12th), the 15 hours are open to parents with children 9 months and older instead.

Additionally, free childcare will be extended again in 2025, with 30 hours of free childcare support available to eligible working parents with children under 9 months old. Learn more about applying for free childcare here.

 

Growing Crime Rates Affecting SMEs Online and Off

A joint Global Small Business Study from technology firms McAfee and Dell has shown a significant level of cybercrime among small businesses, with just under half of SMEs involved in the study (44%) reporting a cyberattack of some kind on their business. These attacks take a high financial toll, as 61% of the affected businesses report losing more than £10,000 on either fixing the issue or during the cyberattack itself.

In addition to digital concerns, small businesses across the UK should stay aware of in-store crime. The Office of National Statistics has found that shoplifting has increased by 37% compared to 2023, while a report by insurer SimplyBusiness released in May shows that more than half (57%) of the businesses they surveyed have lost at least £250 of goods to shoplifters. The report even finds that 16% of those businesses lost up to £5,000 to thieves, which can be a significant financial loss for an SME.

 

IR35 Tax Changes Are A Significant Game Changer For Contractors

IR35 is a piece of legislation that ensures self-employed workers pay the correct amount of income tax. Since its first iteration in 2000, it’s been changed fairly frequently, with further updates having come into effect from April 6th 2024.

The new changes were introduced to benefit contractors, seeking to resolve the common contractor issue of “double taxation”. This is where a contractor would be incorrectly deemed to be “outside” IR35 (and therefore not liable for PAYE) but would later be billed by HMRC for both PAYE and National Insurance.

However, the government’s solution to double taxation means that contractors are deemed “inside” IR35 much more often. When a contractor is inside IR35 for a particular project, they are treated as an employee for tax without being eligible for any of the benefits or protections that actual employees receive.

 

Small Business Surveys Show Optimism For The Latter Half of 2024

Although SMEs face significant pressure from multiple external factors, most small business leaders in the UK are still expecting a positive end to the year, according to multiple business surveys. We’ve provided the statistics below:

 

• Research by financial services provider iwoca finds that nearly half (47%) of small business owners surveyed expect their turnover to grow in 2024, up from a quarter (26%) in 2023.
• The small business advice platform co.uk has reported that 71% of UK startups are optimistic about meeting employee pay expectations in 2024 despite employee salaries and benefits being their biggest expense.
• The Annual Donut Survey from Atom Marketing finds that two-thirds (66%) of UK SMEs and independent freelancers expect 2024 to be a more successful year than 2023.

 

UK Elections: Voting For Your Business

We’ve looked back at the biggest SME news stories throughout the first half of the year, but it’s also important to look ahead to the future. For small business owners, the general election is certain to be a hugely significant event. Below, we’ve provided a brief overview of what the main political parties have said regarding SMEs. While their manifestos are obviously all highly positive, it’s important to remember that these changes are unlikely to come into effect immediately.

• Labour: The traditionally pro-working class Labour party is seeking to support small businesses with a series of financial reforms, including promises to roll out banking hubs that will give small firms access to banking services on the high street and changes to the English business rates tax system. Additionally, they are trying to increase the pressure on larger businesses to report their payment practices, which will help eliminate the late payment of invoices to small businesses.
• Conservatives: While in government, the Conservative party has consistently cut the National Insurance tax, aiming to abolish “the main rate of self-employed National Insurance entirely” by the end of the next parliament. Like the Labour Party, the Conservatives will be looking to reduce late invoice payments but plan to do so by promoting digital invoicing and giving more power to the Small Business Commissioner.

 

365 finance: Providing SMEs With Good News For Over A Decade

The rest of the year (and 2025) may not all be smooth sailing for your business, but having a strong financial foundation can help you weather most storms. If you don’t have much capital to invest in your company and need a fast, accessible option for funding, consider 365 finance.

We offer revenue-based funding to UK-based small businesses, with applications taking less than a minute and a 90% approval rate. Once you’re approved for funding, we typically send it within 24 hours. On top of the accessibility of our finance, we have no spending stipulations, meaning you can invest the funding wherever your business needs it most.

At 365 finance, we can provide both long and short-term financial solutions, with revenue-based funding available from £10,000 to £400,000 in capital. Apply for Rev&U today without affecting your credit score, or speak to our team to find out how we can help your business. To find out more, head to our website.