Azets expert calls for pro-business tax reforms as new Prime Minister arrives
After weeks of speculation, Andy Burnham has secured leadership of the Labour Party, and is set to assume the office of Prime Minister. Ahead of the change in management at 10 Downing Street, Praveen Gupta – UK head of tax at professional services firm Azets – argues changes and clarity in the tax system are now needed to create and keep the next generation of Bransons, Dysons and Bartletts in Britain.
As the former Prime Minister Keir Starmer departs, there has been a great deal of discussion as to how a reformed tax system might better propel the nation forward to meet future challenges. While a number of experts have called for overhauling taxation to bring in more revenue from the country’s wealthiest people, another has argued that Britain’s tax system is “crushing entrepreneurs”, and needs to be changed if the government wants more people to start, scale and sell a business.
Praveen Gupta, UK head of tax at international accountancy and business advisory group Azets, said the current system needed changing to encourage entrepreneurs to start businesses, hire staff and help the UK economy grow.
“There is no incentive to set up, scale and sell a business in the UK. It costs more than ever to recruit staff and if you are able to sell your company, the Treasury takes a bigger slice of the proceeds than it has in decades. We understand the government needs to balance the books, but right now the tax system is preventing entrepreneurs from doing what they do best and the economy is suffering as a result.”
Figures from Companies House analysed by Azets show that there were nearly 13,700 fewer company incorporations in the 2025 calendar year compared to 2024. And according to Gupta, there is now a “real risk” the UK will lose the next generation of Bransons, Dysons and Bartletts “unless something changes”. Either because (as Dyson has already done), “they’ll go abroad”, or because they “won’t take the leap and start their own businesses.”
To avoid this, he proposes a four-part solution to take the shackles off would-be UK entrepreneurs. This means raising the Employment Allowance rate to £50,000; slashing the rate of Capital Gains Tax (CGT) to 10% for people selling a business; restoring the Business Asset Disposal Relief (BADR) lifetime limit to £5 million; and introducing a two-year Employment Tax Roadmap.
“This approach would make it easier for businesses to hire” Gupta contended. “ It would reward founders who have successfully exited a company – especially an SME – and provide stability for the UK business community about the government’s plans for Employment Tax policy. Any impact this would have on Treasury income would be offset by the fact that there would be more money going into the economy as a result of these changes, and more jobs created across the UK.”
Higher thresholds
Gupta also suggested that raising the employment allowance to £50,000 would give employers more confidence in managing their costs and improve their willingness to hire new staff.
“A £50,000 employment allowance threshold would cut the National Insurance costs of the SMEs in the UK, as an employer wouldn’t have to pay anything unless their wage bill was more than £333,333 - currently NIC is due when a wage bill reaches circa £70,000. This small change would make a significant difference to SMEs – and to the UK’s employment figures – as firms would be more willing to hire people as they would know the NI costs could be managed and they’d have the funds to do it.”
When it came to changing CGT and BADR, Gupta argued that a new CGT threshold and a restored £5m BADR limit would enable successful entrepreneurs to benefit more from business sales – and potentially make them more willing to invest their earnings back into UK businesses.
“Entrepreneurs typically don’t retire – many of them invest some of their hard-earned money from selling their businesses into start-ups or new companies looking to scale. Taking less of the money they make from selling a company would give them a larger amount to invest in new businesses, effectively creating an army of business angels who could help the entrepreneurs of the future grow.”
He also called for a rolling two-year Employment Tax Roadmap, which he said would allow business owners time to plan ahead of any new changes being introduced.
“The last two Budgets have had a significant impact on businesses, and both have given them little time to get ready for any changes the new tax year brings,” he explained. “An Employment Tax Roadmap would enable business leaders to plan more effectively and budget more accurately, which create more stability for businesses and the economy – in terms of growth, tax revenues and recruitment.”
Gupta concluded, “If the UK wants to avoid its entrepreneurs becoming an endangered species and really fuel economic growth, the government needs to take action now and evolve the tax system into something that encourages rather than stifles entrepreneurs and which gives them the stability they need to start and scale businesses. If it can achieve that, the economy and the country will be much better off.”
