Rachel Reeves urged to avoid ‘anti-enterprise tax rises’ in budget

Britain’s largest employers’ group has warned Rachel Reeves against introducing “anti-enterprise tax rises” at this month’s budget.
The Federation of Small Businesses said the chancellor should not be “lured into” tax rises that would be damaging for entrepreneurs as she seeks to repair the public finances.
Reports that Reeves is considering increasing capital gains tax, which at present is charged at a lower rate than income tax, have prompted warnings that the incentive to start and grow companies is at risk of being undermined.
In its budget submission the federation called on the chancellor not to scrap a relief that allows entrepreneurs to pay capital gains tax at 10 per cent on all gains on qualifying assets up to £1 million, instead of the standard rate of 20 per cent.
“Without [this] and other incentives, there is little reward to the risk” that small business owners take, the group said.
The federation also called for support to ease employment costs, including by reintroducing a rebate that allows small companies to reclaim the costs of statutory sick pay and by increasing the generosity of the employment allowance, which reduces the cost of national insurance contributions for small employers.
Reeves should protect more small companies from business rates, the commercial property tax, the group said. It also asked the government to take action to stop “blanket” demands from lenders for “personal guarantees”, which can mean business owners being asked to put their homes on the line when their companies borrow money.
Tina McKenzie, policy chairwoman of the federation, said: “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.”
In its submission to Reeves, the CBI said the chancellor could provide a “tone-setting” budget to demonstrate to markets, investors and businesses that the UK had a “credible plan for boosting its growth trajectory”.
To kick-start the UK’s productivity and private sector investment, the CBI has called on the chancellor to add flexibility on which courses can be funded by the apprenticeship levy and to announce a package of non-taxable health support to help employers to invest in their workforce in order to cut economic inactivity due to ill health.
Alongside reform of the business rates system, in its 21-page pre-budget submission, the CBI also wants the Treasury to introduce a “business tax roadmap” to provide a long-term framework to fiscal policy to give businesses the “certainty and clarity to invest and plan effectively”.