THE chancellor’s Budget speech contained many references to entrepreneurs, but what was the substance, and will small businesses actually benefit?
The main announcement was a one-off £2.5bn package to help small businesses. However, not all of this money will go directly to helping entrepreneurs. “The package includes all sorts of things including the university regeneration scheme,” points out Debbie Griffiths, tax partner at Deloitte. So the slice of the pie available to entrepreneurs is not as large as the top- line figure suggests.
Another headline grabber was the doubling of Entrepreneurs Relief. This means that entrepreneurs who go on to sell their business will pay 10 per cent tax on the first £2m of profits. In real cash terms it will save entrepreneurs £80,000, however it won’t benefit start-ups.
Andrew Hubbard, tax policy director at RSM Tenon, applauded the government’s decision to permanently extend the Business Payment Support System that allows business to stagger their tax payments: “Had the service been withdrawn, many businesses could not have coped with bringing their tax payments up to date in one fell swoop.”
An increase in bank lending to small businesses was also expected to raise some cheer in the entrepreneurial community, but it fell flat. “The banks won’t turn on the taps overnight, which won’t help businesses that need money right away,” says David Bywater, tax associate partner at KPMG.
But what do the entrepreneurs themselves think? Simon Dolan, a serial entrepreneur and founder of SJD Accountancy, called it “rubbish”. “There is nothing in the Budget to help entrepreneurs. There should have been more tax cuts in it and definitely a national insurance holiday for entrepreneurs as hiking the rate won’t help us to employ more people and so won’t help the economy recover,” he says.
Mike Powell, co-founder of private equity firm Thematic Capital Partners, says that he would have liked there to be simpler tax rules for entrepreneurs: “It seems that every time we have a budget the tax rules for small businesses get more complex. I would have liked something braver,” he says.
However, Steve Mahon, founder and chief investment officer for Low Carbon Investors, was pleased about the £2bn green investment fund: “This is a good step in the right direction and should help secure other sources of finance for the technology sector.” Mahon was also happy that the government kept a lid on capital gains tax: “This was a welcome relief for all venture capital funds and their investors,” he says.