The scrapping of Entrepreneurs’ relief could discourage entrepreneurs’ from setting up businesses in the UK, say leading accounting, tax and advisory firm Blick Rothenberg.
Nimesh Shah a partner at the firm said: “It has been reported that the Resolution Foundation think tank suggested that the reported £2.7bn cost of entrepreneurs’ relief could be diverted to the NHS.”
Shah added: “While this is a laudable idea, they are not appreciating that the relief encourages entrepreneurs to establish businesses in the UK. When they do, their businesses provide the chancellor with taxes from VAT, and corporation tax as well as creating employment which is another source of tax revenue.”
Nimesh said: “Capital gains tax contributes very little in the overall tax take, but this is not because of costly reliefs, but rather most individuals simply do not generate sufficient capital gains to fall into the tax.”
He added: “Those business owners who ultimately benefit from entrepreneurs’ relief (which is a lifetime saving of up to £1 million) are likely to have contributed far more to the economy and tax revenue through the lifetime of business. Before any drastic decision is taken to abolish a valuable tax relief, careful research should be commissioned to quantify the contribution of the UK’s entrepreneurs.
“The UK has an attractive business regime, which is envied by many other countries, and the Government’s business agenda should be encouraged further, and entrepreneurs’ relief has become a key cornerstone, since its introduction over 10 years ago.”
