Business experts call for tax reform that supports entrepreneurs
Significant reform to the UK’s “punishingly complex” tax system is required to drive startup growth and boost job creation in Britain, a new study has recommended.
The lifecycle of entrepreneurs in the UK was examined in the “Britain Unlocked: A Tax Code for Global Ambition” report, conducted by a collective of organisations representing the interest of entrepreneurs and small enterprise in Britain.
Carried out by the Institute of Directors, among other bodies, the study made a series of practical and radical recommendations to HMRC, targeting the “pinch-points” in the tax system that prevent entrepreneurs from scaling-up.
Recommendations for immediate tax reform included the extension of national insurance relief – as an incentive for further recruitment – removing the cap on entrepreneurs’ relief to encourage the continued growth of a startup, and the consolidation of all existing share schemes into one simplified online scheme, supporting self-certification for small business owners.
The study also advised the instant introduction of business rates holidays for entrepreneurs, alongside a significant increase in business rates relief – raising the cut-off from £15,000 to £25,000.
This threshold extension, the group argued, would support small retail businesses driving growth in town centres, providing employment in a sector that has struggled to keep pace with the online world.
A long-term tax reform put forward in the study to support startups suggested combining national insurance (NI) and income tax, targeting a common area of confusion for small business owners managing their own payroll.
Stephen Herring, head of tax at the Institute of Directors, said that the role of entrepreneurs in paying back into the system should be met by government policy that does more to create “simple and fair taxes that boost innovation and business creation”.
“In this report we put forward measures which will help a wide variety of entrepreneurial businesses become job-creating machines, increasing economic growth and revenues for the Treasury,” he said in a statement.
Commenting on the recommendations for tax reform, head of tax at Grant Thornton UK LLP Jonathan Riley stated that creating further efficiency in the tax system would “free up resources to enable growth across the economy”.
He said: “This is even more important for entrepreneurial startups now, as we start to redesign our economy for a post-EU world.”
Is your small business ready for the switch to digital tax? Don’t miss these three steps.