On the announcement of a 25% Corporate Rate and a 130% Super Deduction, Sam Dumitriu, Research Director of The Entrepreneurs Network said:
“A higher corporate tax rate will discourage investment and make the UK less competitive internationally, so it is right that the Chancellor has combined it with a new 130% Super Deduction for investment.
“However, when the two years are up and Corporation Tax rises to 25%, the UK will fall far down the list on international tax competitiveness. Although, we currently have a low headline rate, the effective rate that businesses actually pay is mid-table by international standards due to stingy capital allowances.
“To avoid an investment slump, as the OBR forecast, when the Super Deduction expires, the Chancellor should allow businesses to write off the full value of their investments – the so-called full expensing he mentioned at the despatch box.
“But a high rate, even with full expensing, increases the incentive to engage in sophisticated tax avoidance and shift headquarters. To counter that, the Chancellor needs to think hard about fundamentally reforming how international profit is taxed.”
On the new ‘elite points-based visa’, Philip Salter, Founder of The Entrepreneurs Network, said:
“UK entrepreneurs will welcome the new ‘elite points-based visa’, which will come into force by March 2022, allowing those with a job offer from a recognised UK scale-up to qualify for a fast-track visa. Also, allowing holders of international prizes and winners of scholarships and programmes to automatically qualify for the Global Talent visa will offer the necessary assurance to the very best and brightest that they are welcome in the UK.
“We welcome the expansion of the Global Entrepreneur Programme and review of the Innovator visa. The Innovator visa is currently unfit for purpose, needing fundamental reforms to align incentives so the pricing is clear and more high-quality organisations become endorsing bodies. As our Job Creators report has found, prior to Brexit 49 per cent of the fastest growing businesses in the UK had at least one foreign-born founder. If we are to continue this record, we need to ensure that the visa process is as fast and unbureaucratic as possible.”
On support for businesses to offset corporate tax losses against their last three years of tax, Sam Dumitriu said:
“This will be a boost to businesses who have run up large losses due to the pandemic providing much-needed cashflow.”
On the announcement of Help to Grow, a new scheme designed to help businesses adopt management best practices and productivity enhancing software, Sam Dumitriu said:
“Management practices explain almost a third of the differences in productivity between and within countries. And pre-pandemic data suggests that if the UK’s 1.1m micro businesses doubled their uptake of key digital technologies, it would lead to a £4,050 average productivity for the millions of workers they employ.
“It’s right then to harness the UK’s world class business schools to deliver a programme of peer mentoring to get more businesses to adopt best practice.
It’s also right that they’ll be provided with free, impartial advice and financial support to purchase productivity enhancing software. But there’s a risk innovative business-to-business startups will be cut out from the scheme. It is vital that startups are involved in the design of the scheme and that software vouchers do not only go to tech giants.”
On the Chancellor’s decision not to raise Capital Gains Tax, Sam Dumitriu said:
“Before the budget entrepreneurs warned the Chancellor against ill-thought out plans to equalise the rates between Capital Gains and Income Tax.
If the UK is to remain a destination for entrepreneurs and support repeat entrepreneurship, it is vital that we keep Capital Gains Tax rates competitive and take into account the risk taken by the job creators across the UK.”