There is continued speculation that Entrepreneurs Relief (ER) is firmly in the sights of the Chancellor in next month’s budget. Whilst the most recent speculation suggests that there is potential for reform rather than abolition, this is a worrying trend.
Entrepreneurs and business founders are the lifeblood of the UK economy and this is one of the few tangible rewards they get for taking risks, creating jobs and paying a myriad of other taxes. Whether the budding founder of the next fintech platform or healthcare app will be dissuaded from taking that leap by the potential abolition of Entrepreneurs Relief is a moot point. What we should be doing is providing encouragement and fostering innovation. If business founders are treated like employees, then in time it’s fair to suppose that’s how they will behave. Like any tax relief, ER is not perfect, and it should be under review to ensure it achieves the outcome it was designed to deliver – that’s good sense but to blindly abolish it is lazy thinking.
At Springboard we are privileged to work alongside these wealth creators every day. They come to us looking for support to grow, to develop and ultimately to realise value. Their passion and commitment are fantastic and the wealth they create for us all is to be admired and fostered.
Taking this a step further it’s a smaller leap than ever to imagine an ultimate removal of capital taxes and everyone being taxed on income. Just as the removal of dividend tax reliefs was a disincentive to the UK entrepreneur, then this direction of travel would be retrograde and dangerous and may well result in a shift away from wealth creators basing themselves in the UK.
So, as the Chancellor weighs up his options for 11th March, I would urge him to avoid the easy soundbite. Entrepreneurs Relief is a reward for success and success that benefits us all…