In a letter from its chairman Nigel Mills, the Forum has called for the abolition of inheritance tax to enable finance being saved by entrepreneurs to pay the tax in the future to be invested now, to support the growth and scale-up activity of businesses.
In the letter, Mr Mills writes:
“Most significantly, we believe the biggest boost to entrepreneurial businesses would come from abolishing inheritance tax. Business people who are subject to this outdated tax are having to save money that should be used, instead, to invest in enterprising companies.
“These dormant funds would be better used if they were available to support the growth of companies and generate tax receipts for the key Government revenue streams including income tax, VAT, national insurance and corporation tax as a result of increased investment and additional employment.”
The Entrepreneurs’ Forum also believes the Chancellor should maintain or extend schemes such as Entrepreneur’s Relief, which enables business owners to pay less capital gains tax when selling part or all of their enterprise. Currently, entrepreneurs pay tax at 10 percent on qualifying assets.
In addition, the organisation, which has more than 300 members in the North East that have a combined turnover of in excess of £2.3billion and employ more than 23,000 people, has also encouraged the Chancellor to retain or extend the Enterprise Investment Scheme (EIS) and the Seed Enterprise Investment Scheme (SEIS).
EIS is designed to help smaller, higher-risk companies raise finance by offering tax relief on new shares in those companies that qualify. For the investor, it’s a tax efficient way to invest in small companies. SEIS is a derivative of EIS and aims to encourage seed investment in early stage companies, enabling investors to receive tax relief on investments.
Nigel Mills said: “The Autumn Statement is the ideal opportunity for the Chancellor to confirm the Government’s commitment to entrepreneurial businesses and the contribution they make to the economy. To enable these businesses and other entrepreneurial companies across the country, to further enhance their role in the UK economy, it is vital that the UK creates a pro-business, pro-enterprise climate, which encourages investment and growth in the current, post-referendum economy.
“Delivering an encouraging environment for entrepreneurs would create more businesses and encourage high net-worth individuals to invest in the kind of entrepreneurial companies the country needs to take the economy forward. Therefore, a commitment to supporting enterprising, privately-owned businesses in the Autumn Statement would send a clear message from Government that entrepreneurs are central to the economic prosperity of the UK.”