I’ve always thought that taxing / punishing employers for creating jobs through Employers’ NI is counter intuitive and more so now given rising levels of unemployment. Whilst the £4,000 Employment Allowance helps small businesses cover the cost of some of this tax, the fact that almost every employer in the country (including PLCs) qualifies does stick in my throat somewhat. I would therefore scrap Employers NI for small businesses (under 50 employees) for a period of 2 years and for larger businesses (50 or over employees) for 1 year. The Employment Allowance would return in 2 years but only small businesses would qualify.
Entrepreneurs are the lifeblood of business, generate wealth, jobs and pay vast amounts of tax into the treasury. It seems odd that they have been attacked by recent governments and that Entrepreneurs Relief has been reduced from a lifetime allowance of £10m to £1m recently with rumours of it being axed altogether. Post Brexit we need to be as attractive as possible to those thinking about where to build their businesses so I would increase this valuable relief back to £10m for a period of at least 5 years to bring certainty in a time of low confidence and uncertainty.
The business rates holiday for 2020/21 for retail, hospitality and leisure sectors has been welcome during the pandemic and must be extended into the next tax year but not for supermarkets and other essential retailers. Whilst many of the supermarkets have returned their refunds on the back of record sales, many have not despite paying dividends to shareholders. This is immoral and I would also increase Corporation Tax for supermarkets by 5% for a period of 2 years to help pay for some of the measures I’ve proposed today.
The reduced rate for Covid affected businesses in hospitality, holiday accommodation and attractions has been a welcome boost for businesses in these sectors on the occasions they’ve been allowed to open in the last 10 months and must be extended until at least Spring 2022 to give them the opportunity to recover some of the losses incurred during lockdown. To pay for this I would reduce the VAT registration threshold from £85,000 to £5,000 which would bring many more businesses into the VAT regime but also level the playing field for VAT registered businesses competing with non VAT registered businesses on price.
As we teeter on the brink of recession it’s vital businesses are encouraged to spend cash reserves and invest in making their organisations more efficient and future proof. The recent extension of the £1m Capital Allowances Annual Investment Allowance to 1 January 2022 is welcome but with many businesses unlikely to reopen until later this year they may not be in a position to take advantage of this during 2021. I would therefore extend this to 31 December 2022 so that organisations are not forced to make hasty decisions at the back end of this year.