Tax Breaks for Entrepreneurs

5th March 2015

Tax Breaks for Entrepreneurs

 

For entrepreneurs, growth can be spurred by government tax breaks and in the run up to the election, the parties need to think how they can continue to help growing businesses as well as those that are just starting out.  Election time always creates uncertainty but business owners are urging any new government to remain committed to tax breaks that inspire this country’s growing ventures. 

One of the main concerns is to maintain the rate of Entrepreneurs’ Relief which currently means that business owners pay only 10% tax on the sale of their businesses as opposed to the normal 28% rate.  The lifetime limit for business owners is a relatively generous £10m. There are also calls from the business community to improve the current Enterprise Investment Scheme (EIS).  At the moment, investors who are prepared to take the risk, can obtain income tax relief at 30% - on up to £1m per year – by investing in small companies.  There is an equivalent for young businesses called Seed EIS where the income tax relief is even higher at 50% but each company can raise only £150,000 using this option. 

It is felt by many that these are the only two significant tax breaks:  Entrepreneurs’ Relief and EIS.  Calls are therefore being made for these reliefs to be strengthened and for government to acknowledge that small businesses need help in return for the jobs which they create and the taxes which are paid by them and their workforce.  Although help has been given at the grass roots level, many feel that more needs to be done to provide capital for growth and the removal of the EIS limit would be one option. 

 

Written by Paul Feist, Managing Director

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