Britain's tax system is crushing entrepreneurs and requires urgent reform to encourage business creation, growth, and sales, according to Praveen Gupta, UK Head of Tax at international accountancy and advisory group Azets.
Entrepreneurs Face Disincentives
Gupta stated: “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.” He acknowledged the government's need to balance the books but argued the current system prevents entrepreneurs from driving economic growth. “There’s a real risk the UK will lose the next generation of Bransons, Dysons and Bartletts unless something changes – either because they’ll go abroad or because they won’t take the leap and start their own businesses.”
Four-Part Solution Proposed
Gupta outlined a four-part plan to unlock entrepreneurial potential: raising the Employment Allowance to £50,000; slashing Capital Gains Tax (CGT) to 10% for business sales; restoring the Business Asset Disposal Relief (BADR) lifetime limit to £5 million; and introducing a two-year Employment Tax Roadmap. He said: “This approach would make it easier for businesses to hire, reward founders who have successfully exited a company – especially an SME – and provide stability for the UK business community.”
Employment Allowance Boost
Raising the Employment Allowance to £50,000 would cut National Insurance costs for SMEs. Gupta explained: “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.”
Capital Gains and BADR Reforms
Gupta argued that a 10% CGT rate and restored £5m BADR limit would enable entrepreneurs to reinvest sale proceeds into new UK ventures. “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.”
Employment Tax Roadmap
Gupta called for a rolling two-year Employment Tax Roadmap to provide stability. “The last two Budgets have had a significant impact on businesses and both have given them little time to get ready for any changes. An Employment Tax Roadmap would enable business leaders to plan more effectively and budget more accurately, which creates more stability for businesses and the economy.”
Economic Impact and Data
Figures from Companies House analysed by Azets show nearly 13,700 fewer company incorporations in 2025 compared to 2024. ONS data indicates an estimated 104,000 fewer payrolled employees between March 2025 and March 2026, and 29,000 fewer vacancies in Q1 2026 versus Q4 2025. Additionally, around 75,000 more people aged 16 to 34 left Britain than arrived in 2025, a gap that has grown yearly since 2022.
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.”
