Will Darling’s moves provide checkmate or stalemate for entrepreneurs?


24-03-2010

While the Budget will undoubtedly be focused on the steps required to reduce the deficit, Ernst & Young is urging the Chancellor to make this Budget a labour of love for entrepreneurs.

Head of tax Cathy Taylor from the Cambridge-based accountancy firm, said: “The Chancellor is heavily restricted in what moves he can make in this Budget. Despite this he needs to focus the Treasury on the threat to our competitiveness as a place to do business. We need the rainmakers to water any green shoots of growth and make this Budget a checkmate victory for entrepreneurs. The last thing businesses need is a stalemate situation.

“We are very interested in what happens to capital gains tax. Gordon Brown introduced ten per cent taper relief on the first million made for businesses, which really helped to encourage entrepreneurs. Now, at 18%, it is still historically low compared to income tax and I would hope that it stays at 18%.

“We are also interested in seeing whether any measures are announced on the move to increase national insurance contributions. The proposed 1% increase is a tax on jobs at a time when it is very important that jobs are created. This would not be such an issue if the economy was in a better state, but there is less room for employers to manoeuvre at the moment.”

She added: “Entrepreneurs will play a vital part in the recovery of the economy and they need to be rewarded and encouraged in order to do so. It is very hard to plan for cash flow and projections when things change so rapidly and entrepreneurs need to be able to prepare for the future.

“Stable tax policy that is pro-entrepreneur is important to economic growth and development. A pro-entrepreneur tax rate is basically a low one. But Government can also encourage innovation by pro-investment rules for the treatment of capital gains and losses, and by creating tax incentives for research and development. There’s also a real opportunity here to think globally by having a tax system that allows businesses to invest and employ workers anywhere in the world.”

 

 

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