Budget must deliver ‘shot in the arm’ for entrepreneurs
The IoD is urging the Chancellor to put entrepreneurs at the heart of the recovery, and avoid damaging tax hikes, in its Budget submission published on Wednesday.
As well as calling for an extension of measures to deal with the ongoing economic impact of Covid-19, the Institute called for a stimulus package to unleash investment in start-ups and scale-ups through targeted reliefs. In the year of COP26 the Institute is also urging help for SMEs to play their part by setting up a new Digital & Green Recovery Credit, to accelerate their investment in technology and carbon reduction.
The submission calls on the Government to provide a grant package to the millions of owner-directors who have been without significant financial support for almost a year. Alongside a temporary relief for employers’ National Insurance Contributions, as an option to ease business costs, the IoD called on the Treasury to help entrepreneurs drive the recovery by not raising Corporation and Capital Gains taxes, as some reports suggest.
To help businesses and the economy to adjust to the post-Brexit landscape, the Institute pressed the Government to issue Brexit adjustment vouchers for SMEs and significantly increase DIT’s resource to help businesses make the most of trade agreements, alongside reversing the decision to scrap duty-free shopping for visitors to the UK. The IoD also urged the Government to put ‘levelling up’ into action, by accelerating the roll-out of faster broadband, investing in R&D, and incentivising retraining.
Jonathan Geldart, Director General at the Institute of Directors, said:
“Entrepreneurs need to be at the front and centre of the Government’s recovery plans. Businesses will be creating the jobs and driving the innovation that the economy needs to rebuild—and this Budget must support them.
“With battered balance sheets and ongoing restrictions, it is paramount the existing package of grants, loans, and reliefs are extended. A cliff-edge in support would be disastrous for business. Also, it is high time the millions who have not qualified for significant income support, like owner directors, are given some reprieve.
“Now is also not the time to be experimenting with higher taxes. Tax hikes right now risk choking off the economic recovery before it has even got started. Instead, the Budget should put a shot in the arm of entrepreneurs by providing reliefs to drive-up investment in enterprising businesses and encouraging small firms to invest in technology, retraining, and green growth. Slashing the burden of business rates and employers’ NICs will also help create the margins for firms to hire and rescale.
“After years of uncertainty and short-termism, the Chancellor must use this Budget to set out a long-term vision for our economy. SMEs should be supported as they adjust to the post-Brexit landscape and seek out new trading opportunities. Meanwhile, upgrades to roads, rail, and broadband must be accelerated, and we must do more to leverage our world-class universities to level-up growth across the country. Indeed, this Budget must pave the way for small and middle market businesses to be the driving force of our recovery.”
Further detail on the IoD’s Budget recommendations:
- Extend the existing Covid-19 economic support measures as long as restrictions continue, and provide a one-off grant package for owner directors who have missed out on support.
- Put off major tax increases, while introducing a temporary employers’ NIC contributions cut and targeted business rates relief for the most affected sectors and for firms improving or expanding their premises.
- Boost funding for scale-ups and start-ups by easing restrictions on the Government’s Seed Enterprise Investment Scheme and Enterprise Investment Scheme, doubling the maximum company investment threshold on the former.
- Encourage wider investment by creating a new temporary Digital & Green Recovery Credit, to support spending in technology (e.g. software, data and IT), carbon reduction, and retraining, and extending the £1million Annual Investment Allowance cap beyond the end of 2021
- Broaden the scope of courses under the Apprenticeship Levy, expand digital, management, and leadership training opportunities, and suspend the Immigration Skills Charge for small businesses
- Deliver more targeted financial assistance for Brexit adjustment, either by making such activity tax-deductible for SMEs, or by introducing a voucher scheme.
- Reverse the decision to scrap duty-free shopping for tourists and visitors to the UK
- Significantly increase DIT’s resource to help businesses make better use of existing and future trade agreements
- Invest in accelerating the rollout of faster broadband, develop regional business support hubs, and encourage stronger links between universities and local businesses. For full details, read the IoD’s Budget 2021 Representation