SMALL and medium-sized firms make up 99 per cent of all UK businesses, but although our nation relies on entrepreneurs to provide employment to millions of citizens, small firms have felt ignored by politicians during the election campaign and the economic downturn.
A survey by accountancy firm Haines Watts, for which 650 business owners from all over the UK were interviewed, found that the majority felt that initiatives from Westminster to help them during the recession were mostly useless. Only 14 per cent of the respondents felt that the VAT cut was helpful, while 11 per cent said that initiatives from the Department for Business and Innovation were an asset to their business.
So how can the next government encourage entrepreneurship? Some of the biggest complaints from entrepreneurs about government include red tape, economic management and the tax burden. Colin Webster, the co-founder of City-based financial services firm Bruin Capital, which launched this February, is happy with the current rate of capital gains tax (CGT), which is 18 per cent, but would not like it to go any higher especially not to income tax levels: “CGT helps entrepreneurs to take the initial risk, hire people and grow businesses.
“Obviously, he would be unhappy with any change to this. We have put a significant amount of our own money into this business and we are drawing modest salaries to get the business off the ground. As an entrepreneur any changes to the CGT rate would really make a difference.”
But equally important to a growing business like Bruin Financial is that there are no extra burdens on employers when they hire staff: “It’s not just a potential increase in national insurance taxes, it’s also all of the other insurance you’re required to have on top of that.”
As we enter a new era at Westminster, entrepreneurs are getting worried about what could be around the corner. With potential changes to the tax regime looming, over half of business owners said that an increase in income tax would heavily impact their motivation to grow the business, and 55 per cent said the same applied to corporation tax.