FEBRUARY 26, 2020: It is being reported that the Government could be set to scrap “entrepreneurs’ relief”, a hugely valuable tax break for risk-taking business owners.
In my opinion, this would not only be a huge mistake, but would send out a damaging message that the UK is no longer prepared to support and reward enterprise.
When a business is sold, the shareholder or owner currently only pays 10% tax on the sale proceeds, up to maximum of £10 million per person.
Abolishing, or indeed totally removing this relief in the upcoming budget would be totally contrary to what I feel the State should be doing right now – that’s encouraging wealth creators to grow their businesses.
Because let’s remember, these are the people who are taking the biggest risks. The least they deserve is the incentive of a decent end reward if they get it right.
We’re very good in this country at building people up, only to knock them down in double-quick time.
It baffled me last year when Bet365 chief executive Denise Coates faced the wrath of columnists for awarding herself a record-breaking pay deal.
They completely missed the point, portraying her as someone who was on the take, when the truth is that she is giving . . . again, and again.
If Bet365 makes a billion pounds of profit, around 50% will find its way into the chancellor’s coffers one way or the other.
That’s not even taking into account the extra income tax also being paid by the 4,000 people the company employs, or the millions of pounds of charitable support that Denise’s success allows her to provide.
The further these companies go, the better it is for the UK economy, and all of us.
However, if the chancellor does decide to axe entrepreneurs’ relief on March 11, there are likely to be fewer start-ups in the UK with the similar kind of drive and determination to build a business empire.
And what incentive would there be for investors to remain in the UK to fund small, fast-growing businesses?
All in all, it would add up to being one of the more absurd initiatives in recent years; with the Government effectively shooting itself in the foot.
The role of enterprise should never be undervalued, and business owners should never be made to feel guilty about their success.
The last thing we want is to be providing a reason for entrepreneurs to relocate overseas right now; on the contrary, we must encourage them to want to stay in the UK, so our country can benefit from their enterprise and endeavour.
It’s a two-way street. The State can’t expect small and medium sized businesses (SMEs) to prop up the economy – it needs the self-made entrepreneurs and trailblazers to keep pushing ahead, breaking boundaries and innovating.
If you encourage SMEs with the right sort of tax breaks, you never know how far they can go. Some could become gigantic enterprises, like Bet365, or JCB, providing careers and livelihoods for thousands of people.
They’ll only do that, though, if they think it’s going to be financially worth their while . . .
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