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Monday, 12 April 2010

Business Manifesto for this election: My Blog from October 2009 repeated:

Having a political blog in October I wrote the following------------

Slight me if you like.....still seems good to me

Business Taxes to really get the economy going again?

I am no economist but after being in private business for 32 years, the last 15 of those helping distressed companies, I have listened and learned a lot about small and medium sized business. Based on that experience and my (large) gut feel.... here is my suggestion for kick starting the SME economy.

It is often quoted that there are 4.7m SME businesses in the UK. The majority are one man/woman bands and usually self employed.

My mini tax manifesto is not directly aimed at them but I am comfortable that it would generate increased revenues for the micro businesses out there AND increased tax take for the Exchequer. The aim would be to drive business out of the recession, get more new companies formed (and protect the recession survivors) and get as many people off benefits and into work as possible.


All newly formed companies to be exempt from corporation tax for the first 2 years after formation. For fast growing successful new starts, if the company makes £100,000 net profit in the 2 year period, then this exemption is lifted and "my" corporation tax rate below applies.


Corporation tax (CT) rates for ALL companies would be 10% for all profits up to £100,000 pa; 20% CT for all profits from £100,001 to £300,000 pa; 25% CT for all profits above £300,001 pa.


All new companies with up to 10 employees would be exempt from Employers National Insurance Surcharge on the new PAYE scheme for one year. In year two it would be 5% and in year three the normal rate (currently 12.8% Employers’ secondary Class 1 rate above secondary threshold). The aim would be to encourage new companies to take on people faster, thus reducing unemployment.


When selling shares in a newly formed company I would re-introduce the taper relief system for capital gains tax as follows: Any gain made after three years - 10% CGT on all gains above CGT allowance (currently £10,100 pa). After two years 20% CGT, after 1 year 40% CGT would apply, the aim is to attract investment into new companies and keep that locked in. If an investor sold her stake for gain in year one of that company's life she would be hit hard for CGT. Statistically 65% of all new companies fail within 3 years, the incentive above would hopefully see more new starts survive that terrible statistic.


NNDR - National Non Domestic Rates or business Rates. All new companies to be exempt from NNDR in year one. Then normal NNDR applies. This would encourage companies to take on properties that may be empty and start building their businesses. With the soft market for rents many landlords would love to see properties occupied AND this would mean the landlord does not have to pay empty property NNDR (If the property remains empty and unoccupied after the three month period then Empty Property Rates (EPR) becomes due and payable at the rate of 50 per cent of the full occupied charge. There are some exemptions to empty property rates such as properties which are classed as industrial, or those with a Rateable Value of £2,200 or less).

So my "radical" tax plans would hopefully encourage new companies (specifically not sole traders) to form, take on people, properties and build businesses. In time many would of course fail, many will go on to be larger employers paying full taxes, corporation taxes, rent and NNDR. they would create growth and wealth. They would hopefully act as a magnet for business angel investors, creative venture funders and of course banks should see the ability to lend to "protected" new companies.

Some of these proposals could apply to the surviving SME's such as CGT taper relief and the CT rates. But if they have survived they are generally stronger than new starts AND with lots of new companies forming they will have new customers to sell to as well as new competitors.

Any views or experts opinion that proves that my plans are impossible are welcome!

Politicians - what do you think?

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Many thanks for your comments. If you have a private business problem and you want advice give us a call on 0800 9700 539 or email me at keiths@companyrescue.co.uk. If you are a professional advisor with a troubled client, please suggest they visit www.companyrescue.co.uk or contact me as above.

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