By Neal Gandhi
Entrepreneur and Investor
Much of the commentary about the 50p income tax rate focuses on whether wealthy people will relocate to countries with more benign tax regimes or about whether foreign business people will choose to locate to the UK or not.
The problem appears to be that neither of these constituencies resonates with the average person and so there is a danger that the country sleep walks into accepting a tax rate that I believe is deeply damaging for the country.
In order to explain why the 50p rate should be reduced as soon as possible, the argument needs to focus on the regular employee currently working for someone else but harbouring an idea to start their own businesses; Britain’s future entrepreneurs, Britain’s future job creators.
During my business career of four start-ups over 20 years, I have created around 1,500 jobs in the UK and around the world. Each time I’ve started a company, like many entrepreneurs, I’ve put everything on the line. I’ve reduced my income to zero or next to zero for at least a year, I’ve used savings to pay the mortgage and other household bills. The quality of life for my family has dropped every time, particularly during those early stages; no holidays, no eating out and so on. If the venture fails for any reason, I’ve put my family a step closer to having a permanent drop in living standards or even losing their home. I am not unique; this is the lot for the vast majority of entrepreneurs. Many go even further; remortgaging their homes or running up credit card debts in order to stay afloat and put food on the table, keep their homes warm and put petrol in the car.
My question with the 50p tax rate is how many people it will put off from leaving the apparent safe confines of corporate life in order to start their own businesses? Why should they risk everything if the government ultimately proposes to take half of what they make should the venture become a success? Taking half of everything an entrepreneur earns is obscene; no one is there to pick up the pieces and help should the worst come to the worst yet it is ok to take 50% if everything goes well! Entrepreneurs relief on capital gains is not enough as most entrepreneurs do not sell their businesses; they tend to run them for years as lifestyle businesses if they’re successful.
The 50p tax rate is bound to stop people starting companies and therefore reduce the number of jobs that Britain creates in the future.
Neal Gandhi CEO www.quickstartglobal.com/