Confidence among small businesses is cooling, according to the latest Federation of Small Business Index that was published in September.
While confidence levels remain firmly in positive territory, SMEs appear more cautious about their prospects than in recent quarters.
After an initial boost given by the clear outcome of the General Election, these results reflect the impact of recent changes announced at the Summer Budget, notably increased taxes on dividends and steep rises in the national living wage.
The number of businesses expecting to grow has also cooled but remains positive, with almost 6 in 10 small businesses (58.7%) anticipating expansion in the next 12 months.
Why Budget Tempers Optimism
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Labour has announced that it will remove the existing tax benefits in April 2016 if it gets into power. This follows the recent Budget announcement where a £90,000 charge was introduced for non doms (a person who lives in a country but is not legally domiciled in it, in other words) who have lived in the UK for 17 out of the last 20 years.
Whichever party forms the next government, it appears that non doms are clearly in the sights of the major political parties and the long standing tax benefits future looks bleak. Most non doms should now consider the likelihood of the tax benefits they receive continuing in the long term as remote.
To dom or not to dom? That is the question
It is estimated that its abolition would affect 116,000 people but there are no certain sources as to how much tax would be generated. What is certain, however, is that it would make the UK less attractive to those who have the resources to choose where they live and work.
Obvious casualties would be the high end London property market and businesses like hedge funds that can easily relocate to more tax friendly jurisdictions.
Like many tax strategies, the long term effects may take years to materialise; new businesses may simply not chose to come to the UK.
Weighted against this is the prevailing view that everyone should pay their fair share of tax. Historically, non dom status is an aberration in the tax system and its original reason for existing has long disappeared.
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