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They can all talk a good game can’t they? For politicians of all persuasions, the rhetoric flows of the tongue as well as any well-oiled modern production line. Supporting British business is something they really like to talk about. However, that ‘talk’ is often not matched by ‘the walk’.
We will soon see the parties releasing their manifestos ahead of May’s election and will soon be able to assess which party truly backs Britain’s growing band of entrepreneurs.
The UK has few barriers?
We think most people would agree that the UK is conducive to business start ups and for those further on in their journey.
The World Bank have produced a league table which ranks the UK 8th in terms of ‘ease of doing business’. Top of the table is Singapore whereas Eritrea props up the rest (including Libya).
The UK benefits from a relatively light touch regulatory framework and there are few barriers to establishing a new business.
What about Government support?
However, a lack of barriers to business is one thing. What about actively encouraging and supporting business?
We can see a long-term pattern in the reduction of corporation tax. However, the problem seems to start when Entrepreneurs look to take funds out of their businesses.
For example, we see ping pong being played with the top rate of tax and this could change once again if, for example, Labour controls a coalition. Pension tax relief is also an area of flux with further changes likely on the horizon.
In the Autumn Statement there were also some fairly surprising and puzzling changes to Entrepreneurs’ Relief. Sadly, one expects that a valuable relief will be further narrowed in the upcoming Budget.
It is in this area that a prospective Government needs to convince Entrepreneurs that Britain has a settled personal tax regime
Entrepreneurs’ Relief, which essentially provides for an effective rate of 10% on qualifying disposals, is also an area the Government can help. Rather than narrow its remit as noted above, the next government should widen it further.
In our opinion, it could be extended to all employees who own shares in their Company regardless of whether they own 5% or not. This would pick up on a similar tweak made in relation to the Enterprise Management Incentive (EMI) share scheme.
At WGE we are big fans of the Enterprise Investment Scheme (EIS) and its baby brother Seed EIS. However, both schemes are overly complex and should be simplified.
Will they listen? Let’s see!