Think Tank Backs IFB on Tax Relief Rules
20th May 2019
This week the Centre for Policy Studies published ‘a blueprint for supporting UK small businesses’ called Think Small. In the report author Nick King lays out a series of recommendations about how government can support small business.
The headline recommendation is the CPS’ call for the introduction of a Simple Consolidated Tax (SCT) for companies with a turnover of under £1 million. They would be able to opt into the system, which would replace Corporation Tax, Employer’s National Insurance, VAT and business rates with a levy on turnover.
The report also backs the IFB’s calls for changes to rules on Inheritance and Capital Gains Tax reliefs. Citing our submission to the Office for Tax Simplification the report says “The Institute for Family Business have reported that companies are increasingly finding difficulties with BPR rules which restrict relief for ‘joint ventures’, which many enter into for perfectly sound business reasons. The government should look to extend the scope of BPR to reflect the increasing prevalence of joint ventures and prevent the BPR rules from discouraging growth decisions.”
On Capital Gains Tax they also support our call for changes to the trading tests for relief to ease succession planning. CGT relief is only available for companies where 80 per cent of their activity is trading, whereas it is 50 per cent for BPR. They say “This can mean succession planning is delayed purely for tax reasons, to the long-term detriment of the company. The rules for CGT relief should therefore be brought into line with the BPR requirements, which would also simplify the two taxes and reduce complexity for businesses.”