Start-up tax breaks like the Seed Enterprise Investment Scheme (SEIS) are encouraging tens of thousands of entrepreneurs to set up their own businesses.
Inspired freelancers, contractors and self-employed workers are starting their own businesses at the rate of around 280 a day every day.
In 2012, official figures from the Department for Business, Innovation and Skills (BIS) reveal 102,000 new businesses started trading, taking the number of small businesses in the UK to a record 4.9 million.
Small businesses – defined as one that turns over less than £5.6 million and employs fewer than 50 people – give work to 14.4 million and turnover a combined £16.6 billion.
This adds up to almost three-quarters of private sector employment and half the total turnover of all private businesses.
SEIS benefits
Business Secretary Vince Cable said: “The figures show just how many entrepreneurs in Britain want to run their own businesses.
“They range from bedroom start-ups to larger technology companies.”
A number of corporate start-ups benefit from SEIS, which offers equity investors substantial tax breaks.
Qualifying companies can pitch for up to £100,000 in funding. Investors pick up a 50% income tax reduction worth up to £50,000 and capital gains tax exemptions if they sell assets to raise cash for their investment and on selling their stake in the start-up when the SEIS ends after three years.
If the business fails, SEIS also allows loss set off against other income.
The government has plans to boost the number of small business start-ups even more with the imminent announcement of the Small Business Strategy.
Under wraps
The details are still under wraps, but Cable has hinted the scheme will offer more financial support for new businesses.
Enterprise Minister Matt Hancock said: “A record 4.9 million small businesses trading across Britain suggests the economy is turning a corner and the financial climate is supportive for entrepreneurs. The number of small businesses has increased by 447,000 since 2010, a rise of more than 10%.
“Nevertheless, the government has much more to do to foster entrepreneurs, like making employment rules and job creation easier, which the new £2,000 Employment Allowance aims to do from April. The allowance will reduce tax on jobs in every company.”
Hancock explaining the £2,000 Employment Allowance reduction for Employer National Insurance starting from April 2014, aimed at encouraging around 450,000 small businesses to take on more workers by slicing their tax bills.
For more information on the Seed Enterprise Investment Scheme and it’s benefits, please visit www.seis.co.uk.