Scaling back entrepreneur tax relief could devastate UK startups
When choosing to ‘go it alone’ as entrepreneur, there are numerous financial, operational hurdles in the way. Starting a new business from scratch is not easy, often requiring huge amounts of time and personal investment.
The risks are very high but so are the potential rewards, with many entrepreneurs going on to succeed in selling their businesses, which is why the Entrepreneurs’ tax relief is important. As well as a great deal of hard work, developing a business often requires financial help in order to succeed. Any help from the Government is beneficial and the tax relief at a reduced rate of 10% can certainly contribute to prosperity. The need for entrepreneurs’ relief has increased over the years due to the growing number of business founders who wish to sell all or a part of an organisation and profit from it.
We have a thriving start-up scene in the UK which is critical to our success as a nation, in terms of job and revenue generation. In particular, the tech sector is playing a crucial role in helping us deliver a successful economy and right now many opportunities are arising for aspiring entrepreneurs. Therefore, it is crucial that the Government backs the entrepreneur tax relief support, rather than rejecting it.
Often, entrepreneurs invest countless hours as well as their own personal funds into their start-ups so scaling back the entrepreneur tax relief could be detrimental to prospective start-ups. Also, a businessperson sometimes creates a company as a side hustle whilst they keep a full-time job, so retracting this incentive is a huge backwards step. Without the tax relief scheme, entrepreneur prospects may be inclined to abandon their start-up business because of economic, social and personal costs that are ignored by the Government. We need a government-backed manifesto to improve the small business environment and to make Britain the best place in the world to not just start, but also succeed in growing a new business.
Since starting iParcelbox in 2019, I have learnt first-hand the challenges facing start-up business, designing a product which tackles the frustration felt by online shoppers who miss deliveries when they aren’t at home, or find their parcel left in an inappropriate place. iParcelBox has been designed to be easy for couriers to use. The delivery driver simply presses a button on the iParcelBox to request a delivery. The first delivery will be accepted automatically, and for subsequent deliveries a smartphone notification alerts the customer, who unlocks the iParcelBox remotely using the free app. The delivery driver can scan the unique bar code inside the lid of the iParcelBox as proof of delivery.
Starting up a business is a long journey and it is so important for the government to offer enough incentive to encourage people to undertake the risk of significant personal, financial risk. There should absolutely be rewards for those who dedicate so much effort to wealth creation. Tax breaks simply encourage people to commit to such ventures. Since the introduction of Entrepreneur relief, the UK has witnessed a booming start up culture and this has aided in making the UK one of the top destinations for entrepreneurs looking to start out. Given we stand at a near record level of employment and have a large amount of new businesses emerging, it would not make sense to reduce it.
It seems unreasonable that as the UK is just leaving the EU, the newly elected government proposes to cut back on a tax relief that motivates entrepreneurs to take risks and go out alone. It is important that there is enough consideration about what this could do for the UK economy, which increasingly relies on entrepreneurs.