Comment: The Budget could have done more for start-ups

The Budget was undoubtedly pro-business but not, unfortunately, pro start-up.

By Joshua March

While I applaud the reduction in corporation tax, which will increase the competitiveness of the UK, this reduction will primarily help larger and already successful companies.

The micro-loans for young potential entrepreneurs are also great but these are structured to only help the most embryonic of businesses, and will do little for the success rate of an ambitious high growth start-up – the kind likely to drive jobs and growth in the years to come.

The first few precious years of a start-up's life are unlikely to be profitable but throughout that time entrepreneurs will be paying boatloads of tax to the government every month on payroll and business rates and the budget did nothing to help reduce this burden.

Combining national insurance and income taxes makes a huge amount of sense: that they were ever separate should never have been allowed in the first place. However, I can't imagine many recently bust entrepreneurs, drinking away their sorrows with their slightly more expensive beer, wondering: "If only my national insurance and income tax had been combined, we would have made it through the year…"

Creating something new from nothing is exceptionally hard. But when it is successful, a start-up drives innovation, jobs and wealth into the economy – and of course pays taxes. To get to that point, an entrepreneur needs to get through herculean challenges.

When I was starting my first company with just a few thousand pounds of investment from friends and family, we had to scramble for every penny. Staff and rent made the vast majority of our costs.

But another massive part of our costs every month went out in payroll taxes and business rates. Without these, we would have been able to grow faster and hire more people.

Last year, I raised a venture capital (VC) investment of £1.5 million for Conversocial – which provides social customer service software for major brands – to allow us to develop the product and go to market. A huge percentage of this investment will go in taxes rather than in actually developing the business.

The amount of tax that an early-stage business pays is nothing when compared to the future tax it can pay as a successful and larger company. If the government is really serious about helping start-ups, it needs to address this with real tax breaks, and not just in the regions where most tax breaks go.

The capital, where the vast majority of high-growth start-ups are based, needs tax breaks too.

Increased competitiveness – the kind that real start-up tax breaks would bring to the UK economy – would encourage more VC-backed start-ups to be based in the UK rather than elsewhere in Europe or America. A real pro-start-up Budget like this would pay dividends for jobs, for innovation and for taxes.

Joshua March is a member of the Entrepreneurs' Organisation and co-founder and CEO of Conversocial, which provides customer service software for Facebook and Twitter.

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