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Reform contract - SMEs

ended 17. June 2024

Reform has today published its ‘contract’. In relation to SMEs and sole traders, its proposals for business rates, IR35 and corporation tax are listed below. Any thoughts, send them across ASAP as this story is BREAKING.

CRITICAL REFORMS NEEDED IN THE FIRST 100 DAYS:

  • Free Over 1.2 Million Small and Medium Sized Businesses from Corporation Tax: Lift the minimum profit threshold to £100k. Reduce the main Corporation Tax Rate from 25% to 20%, then to 15% from Year 3.
  • Abolish IR35 Rules to Support Sole Traders: Britain’s self-employed often work longer hours and take more risks. Many have no pension and receive no sick pay.
  • Lift the VAT Threshold to £150,000: Free up small entrepreneurs from red tape.

THEREAFTER:

  • Support Small and Medium Sized Enterprises (SMEs): Abolish Business Rates for high street based SMEs. Offset this with Online Delivery Tax at 4% for large, multinational enterprises to create a fairer playing field for high streets. Cut entrepreneurs’ tax to 5%.
  • Reform the Planning System: Fast-track new housing on brownfield sites
    and infrastructure projects to boost businesses, especially in coastal regeneration areas, Wales, the North, and the Midlands.
  • Slash Red Tape to Boost Industry and Exports: Scrap thousands of laws that hold back British business and damage productivity, including employment laws. We must make it easier to hire and fire so that businesses can grow.
  • Reform the Tax System: Major simplification is needed. At over 21,000 pages, the UK’s tax code is a burden. Hong Kong’s tax code is under 500 pages.

3 responses from the Newspage community

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Editor
Stephen Perkins
Managing Director at Yellow Brick Mortgages
Some of these policies sound very appealing to small business owners, as most would mean less corporation tax, less VAT and less red tape. What remains unclear is how the country can function if all taxes are to be cut bringing government revenues massively down at a time when most services are facing severe budget deficits.
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Chloe Moss
Director at Tunstall Accounting
These reforms would make an incredible difference for small, owner-managed businesses, creating a more favourable environment for them to thrive. The support for small limited companies during Covid was minimal at best and many businesses have suffered since. Tax rates have been increasing steadily for limited companies over the past few years due to various policy changes and these reforms would go some way to reversing this. Lifting the VAT threshold would allow many businesses who serve the public, particularly skilled tradespeople, to remain competitive whilst still growing their businesses and offering much needed employment opportunities to future generations, which is essential to ensuring that these trades are continued. The administrative burden and cost implications of VAT registration, along with the difficulty of managing cashflow, currently stunts the growth of many small businesses.
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Oliver Savill
Director at AssessmentDay
As the founder of an SME, I know what I'd spend the tax savings on: hiring more people and growing the business, ultimately leading to more tax revenues for the exchequer. Sounds like a win-win.