UK Treasury Launches Review Of Small Business Tax Regime

by Robin Pilgrim, LawAndTax-News.com, London

08 December 2004

Representative bodies for the UK's small businesses have welcomed last week's launch by the government of a discussion paper reviewing the taxation of the sector.

The review will look at how to improve incentives for enterprise in order to encourage more people to start up companies, and will examine whether owner-managers should be treated differently to other types of company owner.

In addition, the discussion paper puts forward proposals for re-assessing the tax treatment of different types of small business. This move has been taken as a result of the rush to incorporate which followed Chancellor Gordon Brown's decision to put companies at a significant tax advantage in 2002.

In the introduction to the discussion document, the Treasury confirmed that concerns have been expressed within the government regarding the "increasing numbers of self-employed individuals adopting the corporate legal form for tax reasons rather than as a step to growth, often as a result of marketed tax avoidance schemes".

Speaking to the Times on behalf of the Federation of Small Businesses, Stephen Alambritis suggested that the review was a welcome development, observing that:

"The Chancellor got in a bind over small-company tax. This provides an opportunity to get it right next time."

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