Parents who invest in their child’s fledgling business will be given tax breaks under Reform’s scheme to rescue Britain’s struggling small businesses.
In plans designed to ‘unchain British enterprise’, Reform will on Wednesday announce that family members would be able to invest in their relative’s start-up in return for income and capital gains tax relief.
Through expanding the ‘Seed Enterprise Investment Scheme (SEIS)’, family members could invest up to £250,000 in their offspring’s business and receive an income tax rebate of 50 per cent in return.
Family investors would get an exemption from capital gains tax if they retain their shares in the business for three years.
Reform will also vow to scrap GDPR – an EU law which forces companies to abide by strict rules around using people’s data – and bring in less onerous regulations modelled on New Zealand legislation.
Commenting on the proposals, Reform’s treasury spokesperson Robert Jenrick claimed that Britain would be ‘the best place in the world to start and grow a small business’ under his party’s stewardship.
He said: ‘For decades governments have focussed on big corporations while leaving small businesses to fall by the wayside. No more.
‘Reform UK believes the 6 million small businesses in the UK are the backbone of our high streets and our economy and we will back them to the hilt.’
Reform’s treasury spokesperson Robert Jenrick claimed that Britain would be ‘the best place in the world to start and grow a small business’ under his party’s stewardship
Shadow chancellor Sir Mel Stride said Reform’s proposals to allow parents and siblings to use such schemes to reduce their tax bills by a quarter of a million pounds each ‘would be a recipe for vast tax planning’
Nigel Farage said small businesses have been ‘suffocated’ by years of punishing taxes, EU red tape and a ‘big-state obsession that rewards dependency over hard work’.
He added: ‘While the establishment parties drive small firms to the brink of closure, Reform UK is offering a bold, common-sense rescue plan.’
But the Conservatives last night branded the proposals an ‘unfunded gimmick’.
Shadow chancellor Sir Mel Stride said: ‘Investment tax relief schemes are vital for encouraging entrepreneurship, but Reform’s proposals to allow parents and siblings to use such schemes to reduce their tax bills by a quarter of a million pounds each would be a recipe for vast tax planning.
‘These rules exist for a reason and Reform’s plan is yet another unfunded gimmick that would end up meaning higher taxes for everyone else.’
And Stuart Adam, senior economist at the Institute of Fiscal Studies said that allowing families access to SEIS would ‘not be a good idea’.
He warned that families may use SEIS ‘primarily as a way to get a subsidy at the taxpayer’s expense, rather than for genuine commercial investments of the kind the scheme is intended to support.’
According to latest figures from the Federation of Small Business, only around one in six small businesses anticipates growth over the next 12 months.
And GDPR may have reduced the size of the UK economy by 0.40 per cent, the authors of a report from think tank The Adam Smith Institute suggest.
Under previously outlined plans, Reform would reverse former chancellor Rachel Reeves’ national insurance increase for British workers and inheritance tax rises on family businesses and farms.
It would also scrap the Electric Vehicle Mandate, which requires car manufacturers to sell a rising percentage of electric vehicles annually, reaching 100 per cent of new car and van sales by 2035.
And it would introduce a ‘Hard Work Bonus’ by scrapping income tax on overtime hours worked above a 40-hour week for employees earning under £75,000.
The party would also raise the threshold at which small businesses begin paying VAT from £90,000 to £150,000, and offer a £2,000 ‘Apprentice Retention Bonus’ for employees who remain at the firm at which have completed their apprenticeship for two years.
