While the UK grapples with political uncertainty, it is time to focus on what needs to be done to support entrepreneurs.
Question: Take two individuals. One works for a company and enjoys a salary under PAYE. The other is an entrepreneur, or maybe just self-employed. Assume the both earn the same over ten years. Who pays the most tax?
Answer: Probably the entrepreneur. The reason is as follows: an entrepreneur’s income is likely to see greater fluctuation – one year it may be tiny – not even taking full advantage of personal allowances, in another year, it may be in the 45 per cent tax bracket.
Or take pensions, there is a £40,000 annual limit to how much you pay into a pension and receive tax relief on. An entrepreneur, with a fluctuating income, is more likely not to be able to afford to pay any money into a pension for several years, but over £40,000 on one occasion. The current tax system discriminates against such an individual, even though they may be an effective wealth creator for UK plc.
But that is just the tip of the iceberg of entrepreneurial. Issues.
The UK is considered the 8th most entrepreneurial country in the world – but it needs to do better.
And that means it needs a tax system that supports entrepreneurs, rather than one that is going to impose quarterly tax reporting.
In the UK election, the Lib Dems proposed a weekly allowance for entrepreneurs trying to set up a business, we need more ideas like that, too.
It is vital, that in all the noise of Brexit, and hung parliament, the cause of the entrepreneur is not lost.
We can start by celebrating the success enjoyed by entrepreneurs, by shining the light of publicity.
Fresh Business Thinking is a champion of the entrepreneur. The NatWest Great British Entrepreneur Awards is a celebration of this key area of the UK economy – and a reminder to the press, public and government that the UK is an entrepreneurial hub – don’t forget entrants can apply here: www.greatbritishentrepreneurawards.com.