Tax tweaks part of government’s business charm offensive

John Healey opened his speech with a pledge to support “business big and small” and “backing the enterprise of British business”.

New measures introduced today included a new founders relief on capital gains tax on future investments up to £10m offering a 10% tax rate on up to £10 million of lifetime gains.

Capital Gains Tax remains unchanged, which he said would offer certainty for SME founders and owner-managers weighing up their future, including when and how to exit their businesses.

UK Private Capital Chief Executive Michael Moore described the move as “pro investment” and said it would make the UK a more attractive place to invest in and grow a business.

“At a time when we need more founders to build, scale, exit and reinvest in the UK, we should be strengthening the incentives for successful entrepreneurs to put their capital and experience back into the next generation of businesses – and the new Founders’ Relief should do just that. We are delighted the chancellor has heeded our calls to tackle this challenge.”

But also less welcome will be a cut to Business Asset Disposal Relief with the lifetime limit reduced from £1 million to £500,000.

He praised business leaders who had delivered economic growth defying forecasts of doom and gloom – “as accurate as predictions as to who the new Chancellor would be.”

Small business rate relief threshold, the point at which businesses start paying rates, will rise from £12,000 rateable value to £18,000 rateable value.

Businesses had been expecting a “breathing space” Budget, with one of Healey’s few pre-Budget statements saying he recognised the contribution of bloody-minded entrepreneurs.

The Chancellor used the term “breathing space” ten times.

Mark Kearsley, partner at DSG, said: “No showstoppers, but plenty to unpack. Founder’s Relief, EMI2, the Founders Fund and the Fund for Female Founders are all welcome measures. But the bigger challenge remains: the cost of doing business, employing people and navigating regulation is still making the UK less attractive to many would-be entrepreneurs.

“If these incentives are to succeed, they need not only to encourage people to build businesses here, but also to keep founders, investment and reinvestment in the UK.

“For Liverpool and the North West, the announcements on devolution, business rates and Littlewoods were positive.

“Capital taxes were surprisingly quiet, with the standout change being the reduction in the lifetime allowance from £1m to £500k.”

There had been speculation that the rhetoric around NIEETs would lead to actions such as making the first hire cheaper, lifting the National Insurance threshold or even a hiring holiday for under-25s, but those measures were paused until after Alan Milburn has published his final report.

Five days before the Budget, Andy Burnham, John Healey, and Business Secretary Jonathan Reynolds, set the rhetorical tone with some measures designed to make compliance guidance “clearer, simpler and small business-friendly”.

They met with small business owners and representative organisations, including the Federation of Small Businesses, at Number 10 North in Manchester, accepting the recommendations of the Small Business Taskforce, which has seen government work in partnership with business leaders over the past months to identify and reduce bureaucracy.