RIDDING the UK’s smallest businesses of employers’ national insurance contributions would help create 500,000 jobs, according to an influential think tank.
A paper from the Adam Smith Institute, Unburdening Enterprise, calls for broad easing of tax and regulation to help create positions and “replace lost public sector jobs”.
National insurance, which raises £54bn for the Treasury, could be replaced by offering private insurance and unemployment packages. The scheme could be rolled out to micro and small businesses immediately, before its removal for medium-sized businesses in a year’s time.
“By phasing out NICs, the Treasury would create a positive signal to small business owners and change their expectations, encouraging them to expand and hire again,” the report said.
The tax burden also necessitates the need for small businesses to hire accountants “to help them cope”, it added.
The business rate hike of 5.6% should also be reversed, according to the institute.
National insurance ‘holidays’, such as the one introduced last year, do not work because temporary structures fail to change people’s long-term plans.
SMEs should be exempt from new UK regulation, while a moratorium should be imposed on future EU legislation.
Incentives should be created to drive jobs for zero-hour, temporary and fixed-term contracts – while encouraging self-employment will reduce hiring costs for SMEs.
A secondary private bond market could help enable funding access for smaller businesses.
The think tank also wants public sector agencies to pay their invoices more promptly.
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A total of £16bn was lost through tax fraud last year, according to estimates released by Pinsent Masons
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Additional tax a result of compliance investigations by HMRC, but overall revenue falls