IoD: ‘A Chancellor pulled in many directions still can’t afford to overlook business’

Amidst widespread reports that the Conservative Party is being urged on all sides to increase public spending, business leaders today warned that vital efforts to boost investment by the private sector could not be allowed to fall by the wayside. The Institute of Directors called on the Chancellor to prioritise tax changes to boost entrepreneurial companies when drawing up his forthcoming Budget, including raising the Annual Investment Allowance cap to £1m, and relieving restrictions on reliefs for investing in start-ups and growing companies.

Alongside its Budget submission, the IoD published its latest economic confidence statistics, revealing how much political turbulence is weighing on business. IoD surveys show that pessimism about the economy as a whole had been growing since the beginning of the year, worsening since the General Election. While there is more optimism to be found in how firms view their own prospects, investment planning has fallen into negative territory for the first time, indicating that companies’ spending decisions are affected by their expectations for the economy. It is therefore vital, the IoD said, that other pressures on the Exchequer are not allowed to crowd-out measures to boost investment at the Budget in November.

Among a raft of policy proposals, the business group called on the Government to:

  • Increase the Annual Investment Allowance (AIA) cap to £1 million per annum, in order to boost investment, productivity and growth within mid-sized companies, as well as employment opportunities.
  • Simplify and liberalise Enterprise Investment Scheme, Seed Enterprise Investment Scheme and Venture Capital Trusts reliefs to encourage investment in start-ups and scale-ups, including relaxing the restrictive criteria for these tax reliefs and simplifying the relevant investor protection legislation so that the key over-arching risks are highlighted, but this is achieved at a lower compliance cost for such businesses.
  • Significantly expand the business rates reliefs already available to microbusinesses in premises with a rateable value below £15,000. The Government must substantially alleviate the impact of the business rates increases affecting SMEs occupying business properties with rateable values up to £100,000.

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