CHANGES TO THE TAX SYSTEM are urged to support the growth of entrepreneurs, found a report from the Grant Thornton UK, the Institute of Directors, and the Prelude Group.
The report, titled Britain Unlocked: A Tax Code for Global Ambition suggests that the UK’s tax system is ‘punishingly complex’. The report examined the lifecycle of an entrepreneur, from start-up – to eventual exit – drawing on the experiences of 15 successful growth entrepreneurs.
Jonathan Riley, head of tax at Grant Thornton, said: “An effective and efficient tax system would free up resources to enable growth across the economy. This is even more important for entrepreneurial start-ups now, as we start to redesign our economy for a post-EU world.”
The new report urges changes to taxes on employment, premises, investment and research and track the careers of entrepreneurs. It claimed that major changes to the tax system are needed to create more jobs across smaller companies and businesses. Over 600,000 new businesses were produced in the last year but more is needed to help them grow into larger firms.
Admin the key problem
The paper contains case studies from entrepreneurs and often the problems are connected to timing or administration, rather than the tax bill itself.
Stephen Herring, head of taxation at the Institute of Directors (IoD), said: “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.”
It has suggested the expansion of investment in entrepreneurial companies by raising the cap on the Seed Enterprise Investment Scheme to £300,000. It also suggested raising the small business rate relief cut-off point from £15,000 to £25,000.
Communicating the availability of research and development tax relief to more SMEs was a key recommendation. The Annual Investment Allowance should be bumped up to £500,000 a year, having been cut to £200,000 in January this year.
Companies should be allowed to pay corporation tax annually rather than quarterly, until benefits reach £5m – currently a £1.5m threshold.
Furthermore, the report stated that the annual capital gains tax exemption should be raised to £50,000. A merger of income tax and national insurance for under-60s was mooted, and employers’ NI should be displayed on pay slips.
Duncan Cheatle, chairman of Prelude Group, said: “Depending on sector, structure, size, and more, the combined effect of taxes and reliefs can have a wildly varying impact upon risk, growth and employment. This report provides a more comprehensive understanding of how the tax system influences or inhibits growth and investment, and how we can improve it.”
The Practitioner becomes frustrated with HMRC's approach to a client's VAT investigation
The firm has made key appointments to its executive team, including a new chief financial officer, and a sales and marketing director
Partners at the insolvency firm Craig Povey and Kevin Murphy were appointed liquidators on 2 February
Fraser Nicol joins the firm from EY, bringing experience in cyber security, data analytics and business technology