Entrepreneurs need more pro-business Government action
According to an entrepreneur think tank, business owners need the government to adopt more business-friendly policies to help them remain competitive. 26% of those polled are considering setting up shop overseas.
Unimpressed Entrepreneurs
According to new research from entrepreneur think tank The Tenon Forum, UK entrepreneurs are suffering from an unfavourable legislative environment, with a 34% of SMEs saying they believe Britain is NOT good for business. And it seems that this negativity is also set to affect new blood, with 53% of small business bosses expecting the number of start-ups in the UK to fall over the coming year.
The Tenon Forum research also found that dissatisfaction with legislation, combined with economic fluctuations, is causing many entrepreneurs to consider leaving the UK altogether. An astonishing 26% of business owners surveyed are thinking about leaving the country in the next three years for this reason, whilst one in 20 have already made plans to set up shop overseas.
Tellingly, the survey reveals that it is those bosses with prior experience of steering a business through recession which are most likely to uproot their business in favour of friendlier legislative and economic climes, with 30% considering making the move within the next three years.
Corporation Tax
Corporation Tax is the area of legislation most highly disliked by entrepreneurs, with 37% of those considering leaving the country citing Corporation Tax as the main factor, whilst Capital Gains Tax and the abolition of taper relief was a key motivation for 16%.
The small companies tax rate has risen from 19% to 21% this year, and 22% in the 2009/10 tax year.
Entrepreneurs also continue to feel alienated by increasing employee rights, with 24% of those thinking about leaving the country claiming this transfer of power is a principal factor.
Income Shifting
Income shifting legislation, due to be introduced in 2009 to prevent individuals from shifting part of their income to another person who is subject to a lower rate of tax, is also giving entrepreneurs cause for concern. 43% of those running family businesses expect tax bills to increase as a result, with 9% claiming they will have to stop employing family members and four per cent believing they will have to close their business because of the impact of this change in legislation. And with Tenon calculations showing that the average entrepreneur already pays a considerable amount of their lifetime income to the treasury in various taxes, any word of additional tax hikes is predictably unpopular.
All this is combining to make UK entrepreneurs feel very unsettled - four in ten (41%) say the current legislative environment is making them less inclined to take risks, while 27% claim it is causing them to delay making business decisions. Over a third (36%) of business owners questioned by the Tenon Forum admit that they do not understand what some legislation means for them and their business.
Andrew Jupp, Head of Tax at Tenon, said:
"Entrepreneurs are genuinely struggling in the current legislative and economic environment and the Government must heed this call for help in order to avoid losing some of the country's most talented business people.
It is also essential that any new initiatives and their ramifications are fully thought-out before they are announced by the Government. The Chancellor's indecision over changes to Capital Gains Tax last year as well as the ongoing uncertainty around the introduction of income shifting legislation have only served to place entrepreneurs in a state of limbo, where they avoid making business decisions which could be affected by a sudden change in policy. However, it's crucial that entrepreneurs concentrate on building and running the great businesses that are the lifeblood of our economy and don't let uncertainty over legislation cloud their vision and drive."
Posted October 15, 2008
