Chancellor Philip Hammond’s recent autumn budget announcement may have appeared to be one of the most business-friendly in recent years, but while many positive elements have been noted in the budget for SMEs, there is still the need to assess risk as the uncertainty surrounding Brexit continues.
Brett Thomas, Head of Dealing at Godi Financial provided ample advice regarding the economy post-Brexit, political uncertainty and the outlook for sterling to approximately 40 SMEs, professional services businesses and advisors, who were in attendance at a budget breakfast briefing held last month (23 November).
Hosted by Gerald Thomas Chartered Accountants at Swansea’s Village Hotel, the firms’ partners John Evans and Phillip Williams, and tax manager Jamie Williams, also joined Mr Thomas to outline exactly what was announced in the Statement and what it actually means for businesses.
Thomas outlined how the further £2.3bn announced for investment in research and development (R&D) will be a welcomed boost for SMEs, as well as the extension of R&D tax credits to 12 per cent. This will result in 2.4 per cent of gross domestic product (GDP) being assigned to funding investments in R&D by UK businesses.
The shock result of the doubling of enterprise investment scheme (EIS) investments to £2m for “knowledge intensive” companies was also highlighted as an initiative to help qualifying SMEs to grow by attracting investment. This means the unlocking of an additional £7bn of growth investment.
It was also noted that SMEs looking to expand internationally will be able to take advantage of the freezing of air passenger duty for all budget and transatlantic air travel, helping businesses to build international relationships and expand globally.
Despite these benefits, which will be enticing to SMEs in comparison to Hammond’s last budget, the message from the event was one of caution in light of current political and economic uncertainty, as well as one of risk assessment, especially for those with overseas interests. It was suggested to seek trusted advice and plan appropriately to take advantage of the opportunities presented by the autumn budget, while also avoiding risk.
John Evans, senior partner at Gerald Thomas Chartered Accountants, commented:
“From a first glance, it may appear that not much changed in the budget with few new opportunities available, however turning this on its head and looking at it from a glass half full perspective, businesses may want to look at what the Chancellor actually kept available and did not withdraw. With uncertainty in business, world events and as Brexit negotiations continue, businesses may want to look at where they can drive advantage through current tax breaks now before it’s too late and the reliefs change. No one truly knows what reliefs will be available in the future until we understand where the economy is heading.”
Brett Thomas, head of dealing at Godi Financial, added:
“I’m thrilled to have contributed to this event with Gerald Thomas Chartered Accountants as guest speaker and to meet with the many SMEs in attendance. There was firm acknowledgement that there have been many positive points outlined in the budget for SMEs, but we are still living in very uncertain times and so these enterprises need to remain cautious with their business ventures.
“For example, there has been a nod to encouraging international business relations with the freezing of air passenger duty from April. Yet we are already seeing UK and Welsh exporters exploiting new opportunities as the weak pound is making our goods and services more attractive to overseas buyers.
“With such international affairs comes many risks, especially with regards to currency, as these opportunities will expose businesses to a volatile currency market and potential financial loss if they are ill prepared for swings in the market.
“I have no doubt sterling will remain turbulent, at least until we are clear on Brexit. It is therefore crucial for SMEs to be as prepared as possible as they seek growth and look to prosper from the perks presented in the budget. Effective currency hedging and professional advice on risk management strategies is paramount.”
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