The Federation of Small Businesses (FSB) warns Chancellor Rachel Reeves against considering tax increases that could hinder entrepreneurship and economic growth.
- The FSB highlights concerns that raising capital gains tax may deter business formation and expansion.
- Entrepreneurs currently benefit from a 10% CGT rate on gains up to £1 million, which supports risk-taking.
- The FSB urges maintenance of current tax relief while also suggesting measures to reduce employment costs.
- The Confederation of British Industry (CBI) echoes calls for a budget that supports growth through strategic reforms.
The Federation of Small Businesses (FSB) has expressed concerns about potential tax policies that may impede the UK’s economic recovery and entrepreneurship. Currently under consideration is an increase in capital gains tax, a move that business leaders argue could stifle incentives for innovation and business growth. Entrepreneurs are currently benefiting from a preferential capital gains tax rate of 10% on gains up to £1 million, a crucial incentive that supports their risk-taking efforts.
Tina McKenzie, the FSB’s policy chairwoman, has emphasised the importance of maintaining these incentives in her discussions. She noted, “The chancellor, in her recent party conference address, gave every impression that she would sensibly avoid being lured into damaging anti-enterprise tax rises in the budget, and we urge her to stick to that.”
The FSB’s submission ahead of the budget outlines several recommendations intended to support small businesses. These recommendations include the reintroduction of a rebate to allow small businesses to reclaim statutory sick pay costs and an increase in the employment allowance, which offers reductions in national insurance contributions for small employers.
Additional measures proposed by the FSB include reforms to protect small businesses from punitive business rates and actions to prevent lenders from demanding personal guarantees from business borrowers, which can place significant financial strain on small business owners.
Echoing similar sentiments, the Confederation of British Industry (CBI) has urged the chancellor to present a budget that reassures stakeholders of the UK’s growth potential. The CBI has pushed for reforms to the apprenticeship levy and non-taxable health support to improve workforce investment. They also recommend a ‘business tax roadmap’ to offer long-term fiscal clarity, allowing businesses to strategically plan and invest.
The calls from the FSB and CBI highlight a critical need for the upcoming budget to foster an environment conducive to growth and entrepreneurship.
