Accountant says UK firms have major tax advantages

Aileen Scott said Britain was among those who taxed entrepeneurs the least. Picture: Fraser Band

Aileen Scott said Britain was among those who taxed entrepeneurs the least. Picture: Fraser Band

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BRITISH entrepreneurs who sell their companies are left substantially better off than their counterparts in rival economies, according to research from Scottish accountancy firm Campbell Dallas.

Research by the firm’s international network UHY found that a owners selling out of a UK company pay far less capital gains tax than those selling in Germany or France.

Assuming an initial investment of $1 million (£665,000), a company selling for $10m would face a tax bill of $900,000. That is $3.4m less than in Germany, $2.3m less than in France and $2.1m less than in Ireland.

For those able to get $50m for their business, the UK entrepreneur would pay just over a fifth in tax, compared with fees on gains of almost half in Germany and more than a third in France.

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Aileen Scott, tax partner at Campbell Dallas, said: “Starting a business can be a testing time. If a government imposes low taxes on entrepreneurs, it helps compensate for the financial risk involved in expansion and creativity.

“The UK government has offered tax relief for research and development for some time. It has also recently created a national insurance exemption for companies employing apprentices under the age of 25. These are strong incentives for business growth.”

Scott pointed out that although Ireland is generally considered to be a low-tax economy, for entrepreneurs selling up the UK is preferable. “The figures show that a UK seller would be left with $5.2m more than their Irish counterpart when parting with a $50m business,” she said.

Few countries have a more favourable tax regime for entrepreneurs than the UK, although Croatia, Jamaica, New Zealand and Nigeria impose no taxes at all for businesses selling up.

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