This is the first of many policy updates. Through these updates, we aim to keep you abreast of any policy changes that affect entrepreneurs from tax changes to reforms to the UK’s immigration system. We know that entrepreneurs are busy people, so we’ll keep these briefs, er, brief.
This month, we’re focusing on the Budget. While the ‘end of austerity’ and tax cuts for 32m grabbed the headlines, there were a range of measures targeted at start-ups, scale-ups, SMEs and entrepreneurs that are worth looking at.
We’re singling out measures that could directly affect your business (for better or worse). For a broader look at the budget, we recommend the Institute for Fiscal Studies’ post-budget analysis. If you’re working in tech then you might also want to look at our founder Philip Salter’s tech rundown for UK Tech News.
A (temporary) tax cut for the High Street.
Small retailers got a boost when the Chancellor announced that he would cut business rate bills by a third from April 2019 for retail properties with a rateable value of under £51,000. This will benefit 90% of retailers. But note, this is a temporary tax break. It will expire in 2021. However, the appetite for reform in the long run will surely grow.
Entrepreneurs’ Relief survives (but with strings attached).
Ahead of the budget, there was talk of scrapping Entrepreneurs’ Relief to fund additional NHS spending. The Chancellor ruled that out stating “I do not believe we can have sustainable public services unless we have a dynamic economy. And encouraging entrepreneurs must be at the heart of our strategy.”
But he did announce additional controls on the relief. Currently, Entrepreneurs’ Relief means entrepreneurs pay a 10% (instead of the usual 20%) rate of capital gains tax on the first £10m when they sell their business. Under the new rules, entrepreneurs will need to have held their assets/shares for at least two years (instead of one). This shouldn’t affect most business owners, but might affect tech start-up founders who sell-up after a year to a Facebook, Google or Amazon (See tbh)…