The number of VAT registered businesses in the UK has hit an all-time high of 2.1m, up four per cent from 2m last year.
The rise has been driven by the thriving national startup economy, according to accountancy group UHY Hacker Young. The number of businesses in the UK per capita has meanwhile recovered to near pre-crisis levels – reaching 32.7 per 1,000 people.
Before 2008 the number of VAT registered businesses stood at 32.8 per 1,000 population. Businesses don't have to register for VAT with HM Revenue and Customs (HMRC) until their VAT taxable turnover is more than £83,000.
Companies are increasingly being founded by people in their twenties and thirties, the research found. There are now almost 400,000 companies in the UK that were founded by someone born during or after 1982. Last year, UHY Hacker Young found that there were 26,420 companies in the UK with a director aged 21 or under.
“The UK government is aware that a large proportion of millennials want to start their own businesses, and has put a range of schemes in place to support new companies,” said Marc Waterman, partner at UHY Hacker Young. “In the past, many would-be entrepreneurs might have thought that starting their own business was too risky. This is no longer the case.”
The UK is ranked sixth out of 189 countries by the World Bank for ease of doing business, with entrepreneurs able to incorporate companies in 24 hours. The UK also has the lowest corporate tax rate in the G20 and was recently revealed to be the best G20 country for ease of starting a digital business according to accountants EY.
Government support from the likes of innovation vouchers, which subsidise advice for small businesses and startups, and entrepreneur’s relief, which reduces capital gains tax for entrepreneurs looking to sell their businesses, are thought to have encouraged people to begin their own business.
More than 10,000 London businesses have received startup loans from the government since the scheme was first launched in 2012.
The capital’s entrepreneurs have received more than £66m through the funding programme, while across the country more than £250m of loans have gone out to more than 40,000 businesses.
The accountancy group warned however that the new national living wage, auto-enrolment pensions, and the threat of having to report more regularly to HMRC could put people off starting their own business.