Comment: Give small business owners the tax break they deserve

9 July 2024

Matthew Parden, CEO of Marygold & Co. comments on what the new government ought to do to help business owners, following Labour Chancellor Rachel Reeves’ first speech. 

Labour Chancellor Rachel Reeves has delivered her first speech highlighting the decade long need for economic renewal in Britain. According to data from Statista, 27% of SME owners cite uncertainty over economic conditions as their most significant challenge. Amongst other factors – such as rising costs and reduced consumer spending – one key factor business owners want to see addressed is business rates and taxation, which are at their highest in 70 years. A hawkish approach to taxation and a lack of flexibility from Westminster has increasingly disincentivised the growth of businesses within the SME arena.

One of Labour’s key pledges from their manifesto is capping corporation tax at 25%, with an additional promise to adjust this if other countries threaten to challenge UK competitiveness. Despite this, smaller businesses across the country will be keeping a stern eye on Labour’s policy platform, with a poll from Simply Business finding that SMEs and scale-ups are demanding urgent support in areas ranging from, tax, regulatory simplification, and greater financial support. The party is, however, reassuring businesses and investors that it will give due warning to any tax and spending changes.

Entrepreneurs are often boot strapped. Every ounce of energy goes into running the business and every penny counts. For the lucky ones who start seeing profits and surplus income after overhead costs are accounted for, they find it is often too late to create a meaningful retirement pot. This is effectively a tax on entrepreneurs who have already paid income tax, VAT, corporation tax, capital gains and many more.

So much so that business owners have been unable to build any meaningful provision for when they stop working into pension plans or tax-free savings accounts. They are also restricted as to how much they can put into them with annual limits.

So, here’s an idea, let’s reward them for their passion, efforts and contribution to the economy and give them a tax break – an ‘entrepreneurs allowance’ which lets them use previous years’ pensions and ISA allowances which are in effect cumulative.

Marygold & Co is a new money management app set launch this summer, with a suite of proprietary features to facilitate savings and money management goals.

Professional Paraplanner