Pete Miller
Chair of Owner Managed Business Committee, Chartered Institute of Taxation
As the Government reviews tax support for entrepreneurs, attention is turning to investment incentives. But the tax environment for starting and growing a business also deserves scrutiny.
The UK’s tax system contains targeted reliefs designed to encourage investment in businesses. Schemes such as the Enterprise Investment Scheme and Seed Enterprise Investment Scheme have helped channel funding into start-ups and early-stage companies.
Yet focusing solely on investor incentives risks overlooking the wider tax landscape facing entrepreneurs. From administrative complexity to poorly targeted reliefs, there remain structural challenges that can shape business decisions and access to capital.
Simplification, where possible, would help reduce barriers and make support more accessible to the full range of UK entrepreneurs.
Complexity and accessibility
Many reliefs involve detailed rules and technical conditions that can be difficult for smaller businesses. Accessing them often requires specialist advice, which may be costly or out of reach for some founders.
Administrative requirements can also be unforgiving. In some cases, relatively minor technical errors may jeopardise reliefs that investors and businesses expected to receive. A more proportionate approach to compliance could help ensure the policy objectives of these schemes are realised in practice.
Simplification, where possible, would help reduce barriers and make support more accessible to the full range of UK entrepreneurs.
Targeting incentives effectively
There’s also an opportunity to review whether existing reliefs remain aligned with policy goals. For example, Business Asset Disposal Relief has become more limited in scope over time, raising questions about how effectively it now supports entrepreneurial activity.
Future reforms might consider how the tax system can better encourage reinvestment, the retirement needs of business owners and long-term growth and scaling within the UK economy, rather than focusing primarily on the point at which a business is sold.
Ultimately, supporting entrepreneurship requires a system that works across the whole life cycle — from start-up and early growth to expansion and exit. This involves more than just the tax system.
The current review presents an opportunity to step back and consider how the tax framework and other regulatory and compliance-related requirements can provide clarity, stability and simplicity for entrepreneurs. Achieving that balance will be key to ensuring the UK remains an attractive place to start and grow a business.
