Chancellor Rishi Sunak must slash taxes to save small businesses

Rishi Sunak must slash taxes to save small businesses from going under, a leading trade body says. 

The Federation for Small Businesses (FSB) has called on the Chancellor to reverse the national insurance hike and cut VAT after firm closures rose 23 per cent in the first three months of this year. 

The organisation, which represents 5.5m businesses, also wants the threshold for business rates relief to be lifted from a rateable value of £12,000 to £25,000, which it says would provide relief for 200,000 businesses. 

Tina McKenzie, the FSB vicechair, said: ‘If the Government taxes us less then the extra money is in the hands of businesses. 

‘We are on the cusp of the UK slipping into recession, we’ve got to take some action now.’ 

She added: ‘Small businesses employ more than 60 per cent of people in the UK. If you don’t support that and you don’t help those small businesses, no matter what you do with big businesses it is not going to make a difference.’ 

Sunak has been slammed for raising taxes, with the UK tax burden on track to be the highest since the 1950s. Many Conservative MPs have complained that the high level of government spending is out of line with the party’s low-tax ideology.

McKenzie urged the Treasury not to wait until September or October to provide help for businesses, adding: ‘We need smart interventions right now.’ 

Julie Palmer, at business recovery specialist Begbies Traynor, said a recession by the end of the third quarter is a real possibility. 

She said: ‘The decision by the Bank of England to increase interest rates to 1.25 per cent might help to control inflation in the long run but small businesses could be facing double digit inflation by the end of the year.’