We started the year coming off a high from a business point of view knowing that the 2019 election gave Boris his majority which would put an end to the uncertainty of Brexit on the basis that the political paralysis was now broken.
Then came the talk of the Budget and the pre-tax planning about removal of ER (aka Entrepreneurs Relief) which would hit SME owners hard. The results of this speculation consumed many professionals, both accountants and lawyers alike and took over as the main driver for their clients. This concern did not prove unwarranted as the lifetime allowance for ER was reduced from £10m to £1m. This means that in a business sale in excess of £1m, the proceeds will be taxed at 20% and not 10%.
This even made my speculations to the ER changes look too conservative and reminded me of a valuable lesson of always preparing for the unexpected. This is what those clients did in their pre-budget planning where they were able to do so.
The detail of the changes to ER has been lost by the press in their budget commentary by the talk of emergency funding for the NHS, the ability to claim sick pay, business interruption loans, business rates being abolished for firms within leisure, hospitality and the retail sector and such like. But all of this is needed as you do not need to be an economist to know that the UK growth in 2020 will be severely curtailed as a result of the Coronavirus and will most likely be the slowest since 2009 as a result of the banking crisis.
That brings me back to the point I always focus on which is productivity and how to do more with less. Businesses should learn and heed well the lessons taught from the Coronavirus, as businesses still need to function and deliver goods and services but with a contracting workforce so productivity improvements will have to be delivered if businesses are to survive and come through the shock of Coronavirus.
It is at times like this that spark innovation as business has to “think out of the box” to deal with situations which it normally does not need to face maybe because a lot of businesses were within their own comfort zone. The message to businesses is to focus on the “bounce-back” and keep applying those productivity improvements and innovations in order to ensure that this decade can try and emulate some of the “Roaring Twenties” in the last century through the collaboration between the political elite and business to engender growth in order to prevent this decade from being another lost decade.