What Labour should actually do to help entrepreneurs

The Resolution Foundation will have to scrap its plans for higher capital gains tax, the Institute for Fiscal Studies will have to redraft the arguments for an exit tax, and the Fabian Society will have to stop thinking about ways to tax dividends more heavily. The left-wing think tanks may have been hoping for a Budget that would be packed with all their pet schemes for raising more revenue from ‘the rich’, but it seems they will be disappointed. Apparently the Chancellor John Healey is planning a ‘budget for entrepreneurs’. After the hammering entrepreneurs have taken over the last decade that would not be very hard – the trouble is it does not seem very likely. All Healey has to do is ditch many of the changes, from both major parties, that have made running a small business so much harder in Britain over the last decade In an interview today, Healey stressed that he wanted his first Budget to encourage people to start their own business. ‘I want to be a chancellor who backs businesses in Britain making a profit, and those entrepreneurs who, in the end, are the ones who challenge the status quo,’ he said. Apparently ‘cutting the cost of living’ for businesses will be just as important for small companies as it is for families. That certainly comes as a surprise. After all, a Chancellor who was appointed as part of an administration that plans to ‘end 40 years of neo-liberalism’, and wants to bring whole chunks of the economy back under public control, does not seem a natural backer of the side hustlers and gig-workers trying to start up their own enterprise. Still, if Healey genuinely wants to help entrepreneurs, it will not be hard. All he has to do is ditch many of the changes, from both major parties, that have made running a small business so much harder in Britain over the last decade. Such as? Here’s a list he could start with. He could restore the entrepreneur’s rate of capital gains tax to just 10 per cent, and put the cap back up to £10 million from the current £1 million. He could exempt private companies from inheritance tax, bringing Britain back into line with most major economies. He could repeal the draconian IR35 rules that make it hard for the self-employed to get started. He could scrap the Making Tax Digital scheme that is forcing small businesses to file four tax returns a year, hugely increasing their compliance costs. He could restore the dividend tax allowance, and index it to inflation, to make it easier for entrepreneurs to pay themselves. He could double the threshold for the smaller companies’ rate of corporation tax to £100,000, and index that to inflation as well. The list goes on and on. None of that would amount to a bonfire of red tape. It would just put someone starting a business in the position they were ten years ago. Of course, what Healey probably means is a fiddly gimmick or two that won’t cost very much. Perhaps there will be a special ‘entrepreneur’s bus pass’ to help them get to that speed-pitch event on time. Or there could be a ‘regional fund’ that local mayors can distribute to start-ups that meet approved social goals. In fairness, Healey is to be commended for making encouraging entrepreneurship a goal of his first Budget. After all the punishment beatings, it makes a refreshing change. It is just very hard to believe he will actually deliver.