Former Dragon wants Tax Break for Start-ups
The idea has been put forward in the British Library’s Enterprising Voices: Supporting the Drive for Recovery report (372k PDF). According to Richard, tax incentives are the most effective way to encourage budding entrepreneurs;
“It takes a good 18 months of solid work before a new business starts to really establish itself. If the Government is serious about encouraging enterprise in the UK, then they need to avoid gimmicks like the VAT cut, and offer start-ups a genuine exemption from tax until they get their businesses up and running.”
The proposal was also endorsed by founder of the Caribbean-themed Mahoe Café, Vanessa Hutchinson who commented;
“With investment capital in limited supply, easing the tax burden on new small firms is an excellent way to motivate enterprising individuals”
“The Government must consider offering new small businesses tax breaks on everything from income tax and National Insurance to business rates and VAT,” added Hutchinson. “Corporation tax in particular poses a big problem for start-ups. Small businesses struggle as it is to raise the necessary finance, but taxing the interest earned on various investment and loans as profit deprives businesses of much needed working capital.”
A spokesman for the Forum of Private Business said exempting new businesses from tax would be “welcomed”, but advised that any proposals would need to be assessed in more detail.
“Tax breaks can be used very effectively to encourage small businesses and would help stimulate long-term economic recovery. In particular we would like to see the high failure rates of start-ups brought down.
“But using tax incentives would need to be treated with caution. Passing the tax burden to existing small firms, for instance, would put them at a disadvantage.”
Tax breaks were recently unveiled by shadow Chancellor George Osborne as one of a series of measures designed to create jobs should the Conservatives win the election next year. Under the party’s proposals, firms in their first two years of trading would be exempt from employers’ national insurance for the first ten people recruited.
A spokesman for the Department for Business, Innovation and Skills (BIS) declined to comment on the British Library report.