Rising interest rates on the back of burgeoning inflation, teetering on the edge of a recession and the war in Ukraine have created a ‘perfect storm’ for UK business owners in the past 12 months. Now as April looms and previously announced corporation tax increases come into effect, you could be right in thinking as an entrepreneur that the UK Government is not exactly your friend.

With the 2023 Spring Budget on the horizon, is it too much to hope for that Jeremy Hunt may announce something that promotes entrepreneurship, business investment and wealth generation?

Don’t hit businesses any harder

With a rise in Corporation Tax due, end of the super deduction and a tightening of R&D tax credits we are all hoping that the Spring Budget doesn’t contain any more bad news for business founders.

A period of stability is essential

After the roller coaster that owners have experienced in the last few years, businesses need a period of relative stability. Many are predicting a boring Budget but dullness that will be short lived with a more headline grabbing Budget in 2024 ahead of a general election.

So, what about Capital Gains Tax ‘CGT’?

At the moment, CGT looks likely to remain unaffected, with no suggestion that this might be increased in the Spring Budget. However, for business founders who are already considering their exit, it is worth noting that CGT could be back in the firing line for an incoming Labour administration.

The next election must be held no later than January 2025 and although Labour have suggested they won’t fundamentally change the current Conservatives tax plans, CGT has historically been an area
that is seen as something of a soft target – just look at the restriction of entrepreneurs relief and other changes.

Whilst we can all hope that a Labour government focused on economic growth, a la Blair 1997, would surely not punish entrepreneurs by increasing CGT rates on business sales there are no guarantees.

Summary

Our overarching message to Jeremy Hunt is one of ‘steady as she goes’ and focus on giving business some stability. However, for business founders, a wary eye needs to be kept on the medium-term tax outlook – that period of certainty may be short lived.