George Osborne’s proposals to boost the post-Brexit British economy by slashing corporation tax to below 15 per cent have been met with a less than enthusiastic response.
The tax is currently levied at 20 per cent of firm profits, but the chancellor told the Financial Times that decreasing it would show investors the UK is “open for business”.
Some critics have dubbed the proposals as plans to turn the UK into a tax haven, with others highlighting more effective uses for the money the policy is set to cost. Among those in the small business space, many have dubbed the plan inadequate.
“Corporation tax is only taken on profits but business rates are taken before you even make a sale,” Federation of Small Businesses (FSB) policy director Mike Cherry told the Evening Standard.
James Fox, a self-employed contractor working in management consultancy, was also skeptical that the move will benefit owners of Britain’s smallest firms. “The cut in corporation tax is of course welcome, but it is cancelled out by his dividend tax changes which will hit the main source of income for small businessmen,” he told Business Advice. “He’s taking with one hand and giving with the other.”
Other small firm owners were more welcoming of the proposals. “Despite being firmly against Brexit, I feel we need to make the most of the position we have found ourselves in,” explained Florence Adjepo, founder of MDMflow. “Anything that supports small business growth and encourages investment can only be a step in the right direction.”
In an open letter to the government, business groups including the FSB and the British Chambers of Commerce (BCC) called for additional moves from policymakers to strengthen the economy as Brexit negotiations get underway.
“Across the UK, the firms and business leaders we represent are considering the opportunities and challenges arising in the wake of the EU referendum,” the authors wrote. “This may be a time for calm reflection, but it is not a time for inaction.”
In the wake of the referendum result, a statement released by ecommerce platform eBay saw the firm pledge to support sellers as changes come into place.
“We believe there are advantages for both sellers and buyers to be part of large open trade blocks. But our business is a global one and our sellers are successful within and outside the European Union,” said a statement on the website.
“British voters have decided that their interests are best represented outside of the EU and so we will continue to put the best interests of British small business owners and customers at the heart of what we do. We will continue to work with the UK government and at a European level to ensure we are close to any changes resulting from this vote, which may affect our customers.”
Still unsure about what Brexit means for your business? We explain the likely implications here.
Sign up to our newsletter to get the latest from Business Advice.