Call on Chancellor to Help Small Businesses Create 1000’s of Jobs Through Tax Incentives

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There's a call on the Chancellor to help Small Business create jobs by tax incentives - article for YBKBS Small Business News for Smart Business Owners
There's a call on the Chancellor to help Small Business create jobs

The Enterprise Investment Scheme Association (EISA) is lobbying the Chancellor to announce some small changes to the Enterprise Investment Scheme (EIS) rules in the forthcoming budget with a view to creating thousands of new jobs in growth businesses, funded by the private sector.

Small businesses contribute anywhere between 40% – 50% of GDP, (Gross Domestic Product). SMEs account for 99.9% of the UK business population (6.0 million businesses), accounting for three fifths of the employment and around half of turnover in the UK private sector. Total employment in SMEs was 16.8 million (61% of the total), whilst turnover was estimated at £2.3 trillion (52%).

Marc Ford

Marc Ford

Editor-in-Chief, Business Media Owner, Business Coach, Author and Keynote Speaker. Works with over 100's of small businesses every year. Trusted by BBC TV and Radio, Channel 4, Mercedes Benz, Hitachi Capital on business matters.

Many commentators are looking to the UK Government and the Chancellor, Rishi Sunak in particular to allow small businesses to help the economic recovery by allowing smaller businesses to grow with less inhibition. At a time when only some of the ripples of an economic crisis, caused by the Global Pandemic, are being felt it seems right that now is the time to grow the exciting and innovative businesses in a ‘post-Brexit World.’

Helping Businesses That Banks Won’t Touch

The EIS scheme delivers equity support from private investors, where traditional bank funding is unlikely to be available, to eligible growth businesses in the early stages of their development. Such investors receive both a stake in those businesses and tax advantages as a result of their investment.

The economic uncertainty during the pandemic has resulted in a fall of approximately 30% year on year in the number of businesses being supported, with an impact on the number of jobs being created

Jobs can be created with a simple tweak to Tax Incentives for Small Businesses - YBKBS Small Business News for Smart Business Owners
Jobs can be created with a simple tweak to Tax Incentives for Small Businesses
A Simple Tweak

In the recent survey issued by the EISA, 85% of EIS supported businesses reported that the investment they received drove job creation, with over half saying that they doubled the number of employees in their companies as they grew their businesses as a result of the additional funding.

By returning to the volumes of eligible businesses backed in 2019, the EISA estimates that a minimum of 1500 new jobs would be created within a year.

By making two simple changes to the existing EIS rules, Director General of the EISA, Mark Brownridge, says that investor levels would see a recovery with the consequent impact on job creation.

“We are asking the Chancellor to increase the limit for the Seed investment stage from £150,000 to £250,000, and to change the current restrictions on businesses using the EIS and SEIS schemes from “the age of the business” to “the size of the business”, said Mark.

He continues, “By making these two small changes we believe that a further £340million would be invested by the private sector and based on the number of additional businesses supported increasing their staff by just five each, we estimate that a further 1500 jobs can be created. And that’s just within the first year of investment with a multiplier effect in future years. We strongly encourage the Chancellor to make these changes in the forthcoming budget.”

A Balancing Act with Political Consequences

The budget on March 3rd will probably have more eyes on it than any usual speech about beer and cigarettes. It is fair to say that the Government have taken unprecedented steps in supporting as many small businesses as possible during the pandemic and now there is light at the end of the tunnel, business owners are thinking  more about the future.

Most small business owners understand that there is now a real hole in the public finances at a time where they thought they would be coming out of a more ‘prudent’ public spending regime. But, it is also fair to say that small businesses have over many years been frustrated at the support lent to what they consider larger businesses and an inefficiency of collecting what is at least fair for the public purse. 

As Rishi Sunak stands at the dispatch box in less than a weeks time, he must consider a balance between filling that huge hole and allowing UK small businesses to be the shining lights out of the economic gloom. Otherwise, as much as we’ll remember this past year for the rest of our lives, small business owners will remember his speech at the dispatch box when it comes to the ballot box in a few years time. 

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Business Coach, Author and Consultant. Has worked with BBC TV and Radio and Channel 4 on business matters. Trusted by Mercedes Benz, Hitachi Capital. Keynote speaker.