Calls grow to scrap tax that could hit SMEs

Serena Humphrey, owner of financial training company The F Word, is calling on Chancellor George Osborne to scrap plans for the new tax, which she claims will make it harder for small firms to survive.

However, Anna Soubry, the minister for small business, has told Ms Humphrey that she cannot meet to discuss her concerns about the tax because her diary is “heavily committed”.

Ms Humphrey has established a lobbying group called Survive and Succeed, which is opposing plans to tax directors’ dividends.

From April 2016 dividends above £5,000 will be taxed at between 7.5 per cent and 38.1 per cent dependent on rate. Ms Humphrey started a petition opposing the new tax last year, in a bid to convince the Government to change its mind.

Ms Humphrey told The Yorkshire Post: “Now we’re just five weeks away from our petition deadline, and are up to 43,841 signatures.

“We have a whole volunteer campaign team now, all working furiously away around the country trying to reach the hundreds of thousands of business owners that will be affected by this. We want the Government to realise that it is such an indiscriminate tax. Most small businesses don’t make much money – the majority just scrape by.

“We are finding that many business owners still know nothing about the tax, and yet we know that every business owner we’ve spoken to is very angry about it and the damage it’s going to do the SME economy.

“This campaign is part of my broader Survive and Succeed campaign, which aims to increase the long-term survival rates of small businesses.

“With our current rate of just a 40 per cent five-year survival rate, there is much to be done to help small companies become stronger, employ more people and pay more taxes.”

Ms Humphrey said her dream was to gain 100,000 signatures, which could lead to a debate about the issue in the House of Commons.

Petitions submitted to Parliament which reach 100,000 signatures are almost always debated, provided the issue hasn’t been debated recently, or a debate is scheduled in the near future.

In response to a letter from Ms Humphrey, Ms Soubry said: ”As you are probably aware, the Government has already responded to your campaign by setting out the rationale for the tax changes. I do not have anything to add to that response.”

However, Ms Soubry said she wanted to underline her support for small businesses “which remain at the heart of the Government’s long-term economic plan”.

The letter added: “Several steps have been taken to reduce burdens. We have, for example, extended the Small Business Rates relief until 2016, and to help reduce employment costs, we will be increasing the annual Employment Allowance from £2,000 to £3,000, taking up to 90,000 firms out of National Insurance contributions altogether.”

Ms Soubry also highlights the fact that the corporation tax rate is being reduced from 20 per cent to 19 per cent in 2017, and 18 per cent in 2020.

The letter also states a permanent increase to the Annual Investment Allowance to £200,000 was implemented this month.

Ms Soubry said: “The Government is also improving access to local business advice and support through Growth Hubs, which join up local resources and are being rolled out across the country.”

Ms Humphrey said she was surprised that Ms Soubry couldn’t find time to come and speak to “worried business owners”.

The directors’ dividend tax is a blow to entrepreneurs, according to Karla Jobling, of BeecherMadden, a headhunting firm.

Ms Jobling said: “For interim candidates who use a limited company as a personal service company, the tax benefits off-set the uncertainty and lack of a benefits package that they would receive as a permanent employee.

“It wouldn’t incentivise me to start my business now, where I have undertaken sig-nificant financial and personal risk, as well as creating 20 jobs along the way.”

BeecherMadden is a niche headhunting firm.