Over the last few weeks we’ve been stuck on repeat – making the case again and again for why the Chancellor must think twice about the impact that rumoured changes to CGT and BADR would have upon entrepreneurs and their employees (who are all too often overlooked in these debates). Over 1,200 entrepreneurs have now signed this letter. Here are the first 1,000!
The letter continues to get lots of press coverage – including in City A.M. this week – and we’re busy connecting entrepreneurs with journalists. One thing’s for sure: the Government can’t say that they weren’t warned.
I’m sure we’ll have more to say on this topic after the Budget, and a lot more work to do on this in the coming months and years, but today I want to write about the lessons from the last few weeks – not so much for the Government, but for us.
First, we need to be more vocal in explaining the policies that matter most to entrepreneurs. There is a lot that unites Britain’s most ambitious entrepreneurs and we need to be proactively making the case for what these things are.
Second, we need more evidence for why these things are important. For example, I’ve been pitching an idea for years to survey the foreign-born founders of Britain’s fastest-growing startups right as they begin their businesses. Foreign-born founders tell us later on that Entrepreneurs’ Relief was a critical issue when they started their business in the UK, but having data from those who are still just starting out would be invaluable.
Third, we shouldn’t go overboard on the doom mongering. Britain is still the best place in Europe to start and grow a business. We are rightly respected around the world for our fairness and the rule of law. We have an incredible history of innovation that hasn’t stopped – just consider Demis Hassabis’ Nobel Prize for Chemistry for his company’s revolutionary work on proteins.
To be clear, we agree with Matt Clifford when he says that the UK could go back to being pretty much the richest country in the world per capita – at least as rich as the US. Whether this Budget is a step towards that dream, or one away from it, we’ll keep working to make it a reality.
Taper Away
This week we invited Shivani H. Menon of Onward to contribute to our weekly Substack Three Big Ideas series. As we’ve explained in the past, Britain’s VAT registration threshold incentivises small businesses to stay small. This threshold instantly burdens any business that only just breaches it with a significant marginal cost. As a result, we see a bunching of businesses that turn over slightly less than the threshold, as many deliberately stop working when they approach it.
To get around this problem, Shivani suggests VAT is tapered: “The threshold could be reduced to £30,000 at a 1% VAT rate, increasing gradually until it reaches a rate of 20% for businesses turning over £140,000 or more.” It’s not a new idea, but one that deserves serious consideration. As I understand it, it would be technically feasible for HMRC to do this and it would be a good compromise between economists and the small business lobby groups.
Rights Ideas?
There is huge concern about the Employment Rights Bill. By the Government’s own analysis, it would cost businesses a whopping £5 billion a year to implement, and the FSB has come out fighting, calling the legislation a “rushed job, clumsy, chaotic and poorly planned.”
Now you’ll have the chance to have your say by submitting your views in writing to the House of Commons Public Bill Committee, which is going to consider this Bill. Naturally, we’re planning to respond, but our policymakers will be served all the better by also hearing directly from those who it will impact most. Find out more here.
Our Newest Adviser
Blick Rothenberg has joined us as a Corporate Partner. Malli Kini, who leads their entrepreneurs practice will become our latest Adviser.
Before joining Blick Rothenberg as a Partner in March 2024, Malli spent over 15 years in the Big 4 (PwC and EY) within their London private client teams. Prior to that, he had an entirely different career as an orthopaedic surgeon in the NHS which he says was much like carpentry – lots of hammers, screws and nails!
Find out how you or your company could join us here.