Labour maintaining support for business asset disposal relief should come as a 'relief' to Britain's small business owners, according to one chief executive.
Ifty Nasir, founder of sharetech platform Vestd, told FT Adviser: "Founders and business owners will be relieved to hear the chancellor’s continued support for the BADR, which is vital for incentivising entrepreneurs to take the risk of starting their own businesses.
“After rumours of BADR being abolished completely, maintaining the £1mn lifetime limit on gains is a good outcome for entrepreneurs."
Nasir pointed out that the Budget stated relief would increase from its current level of 10 per cent to 14 per cent in April 2025 and 18 per cent from 2026.
FT Adviser pointed this out this morning, as one of five devilish details that adviser business owners needed to know.
But despite this rise in the BADR, Nasir said this would still maintain a significant gap compared to the higher rate of capital gains tax.
As reported yesterday (October 30), CGT is set to rise. Chancellor Rachel Reeves said the higher rate will increase from 20 per cent to 24 per cent, with the lower rate jumping from 10 per cent to 18 per cent.
Nasir added: “The news is also a victory for thousands of workers with access to equity-linked rewards like employee share schemes.
"While founders were the focus of much of the discussion around BADR ahead of the Autumn Statement, it also provides relief to employees who benefit from a successful exit."
According to Nasir, such schemes are "vital for the founders and workers generating the growth that is important to the government’s goal of restoring public finances".
Schemes like BADR, the Enterprise Investment Scheme and similar initiatives, such as the Enterprise Management Incentive employee share scheme, are what Nasir described as "the global gold standard, and have put the UK at the forefront as an incubator of innovative startups".
He added: “We will need more of these schemes to provide a relative ‘safe space’ to help businesses scale, so they can bring their full economic potential to this country, rather than being bought and taken offshore.”
However, some commentators have warned the rise in employer NICs might still act as a headwind.
The chancellor refrained from reversing cuts to employee national insurance brought in by the previous government but, as had been expected, targeted employers instead.
From April, employers will see their NICs payments increase by 1.2 percentage points, from the current 13.8 per cent to 15 per cent.
The secondary threshold at which they start paying NICs for employees was reduced at the same time, from £9,000 to £5,000, a move that made some MPs gasp.
As reported by FT Adviser, Reeves said the measures would boost government coffers by £25bn per year by the end of the forecast period.
Commentators such as Jon Greer of Quilter told FT Adviser that while the move will "undoubtedly" hurt employers, it could boost the attractiveness of alternative schemes, such as salary sacrifice.
