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New immigration system likely to hit small Scottish businesses hard – FSB

A new report from the Federation of Small Businesses (FSB) has revealed concerns that small Scottish businesses will be impacted by the UK’s new immigration system.

The industry organisation found that smaller businesses in Scotland have a “higher reliance” on staff from outside the UK.

Across the UK, around half of small hospitality and tourism businesses will not be able to meet the cost of the new Skilled Worker Visa, as small firms are concerned about struggling to recruit personnel like chefs from outside of the UK.

The FSB report found that in Scotland immigrant-led small to medium-sized enterprises (SMEs) contributed £13bn to the economy and provided more than 100,000 jobs.

It recommended that the UK Government adopt the Migration Advisory Committee’s 2020 recommendations and pilot a remote visa, arguing it would complement the policy of the points based system and address skills shortage across the UK.

The FSB welcomed a planned review into the “regressive” business rates systems based on the location and size of the building rather than the “ability to pay”.

It argued that the current rates system includes much needed relief for small businesses, with the Small Business Rates Relief (SBRR), or small business bonus in Scotland, supporting many small businesses to survive.

The FSB also stated the rates system is complicated, as well as “burdensome” for everyone who is still having to pay rates, and in some instances the way that the relief is implemented deters growth.

It says the SBRR and small business bonus has been “vital” to many small businesses in the hospitality and tourism industry.

The research found that two thirds (67%) of hospitality and tourism small businesses that get the relief and bonus reported it as essential and believe their businesses would not survive without it.

The year-long extension to the 100% Covid-related relief for retail, hospitality and leisure businesses helped many firms in these sectors recover from the pandemic.

The tax-break provided relief for firms with a rateable value of up to £15,000, delivering a maximum saving of £7,470, with a smaller taper for firms with a collective rateable value of up to £35,000.

The FSB welcomed the review the Scottish Government has commissioned into the small business bonus, which is due to report in the Autumn.

However, the FSB in Scotland also urged policymakers not to “drastically” change the shape of the support for smaller businesses, as recovery from the crisis will take time.

It argued that one of the concerns is how the changes being made to property tax in England will affect Scottish ratepayers, especially if the current regime is supplemented with a non-devolved levy – like an online sales tax.

FSB Scotland has previously made representations about expanding rates relief to small businesses located in higher value premises, such as rural hotels and independent hospitality businesses.

It has also pressed the UK Government to make property tax more “user friendly”, without having to access professional property advice.

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