Government advisors are recommending that the UK tax policy should be dramatically altered when it comes to SMEs. If you are a small to medium sized business owner, you might benefit from these changes in the coming years – that is, if they happen.
A recent report issued by the Office of Tax Simplification (OTS) has come out strongly in favour of an overhaul that would see SME owners benefitting from easier to understand rules. The findings are deeply critical of what it refers to as a “complex patchwork” of tax rules that small business owners have to deal with.
What do the OTS claim?
The OTS is an independent branch of the Treasury, and they claim that the not only do tax rules need to be simplified (as is their mandate), but that tax relief should be more available to all.
The report claims that these reliefs should be “more accessible and to better enable businesses to fulfil their potential.”
Enterprise Investment Scheme
One of the main schemes the report takes umbrage with is the enterprise investment scheme (EIS). At face value, this plan should provide income tax relief up to 30% on certain investments for qualifying business owners, as well as complete relief on capital gains tax.
Paul Morton (the tax director of the OTS) specifically points to EIS as the kind of overly complicated, jargon filled tax law that should be avoided.
Making the most of tax relief
While there are plenty of tax relief schemes out there, Morton expresses shock and dismay that more SME owners don’t know how to take advantage of them (if they even know they exist).
He said: “the information is all out there but people are clearly finding it hard to work through.”
The report lays out 32 discrete observations and recommendations, all designed to encourage entrepreneurship across the UK.
Managing your finances
The new report is well worth having a look at for any small business owner, as it fills in some of the gaps that they might have in their taxation knowledge. Of course, one of the smartest things that any SME owner can do is to stay on top of their bookkeeping and taxes.
While we all have our own preferred ways of doing this, more and more businesspeople are choosing to move their bookkeeping and accounting onto cloud based software solutions such as Pandle.
We might be biased, but we believe so strongly in the effectiveness and ease of Pandle that we are keen to recommend it to any freelancer or SME owner in the country.
We definitely agree with his sentiments in this new report – it claims: “The more time people can spend running their businesses and the less on tax, the better as it will improve productivity.”
Hear, hear! The team here at Pandle couldn’t agree more.