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Entrepreneurship is the lifeblood of the UK economy, with start-ups and small businesses being crucial to economic dynamism and wealth creation.

The UK economy is a haven for start-ups. According to the Financial Times, 660,000 new companies were formed in 2016, up from 608,000 in 2015. A report by Virgin has suggested that start-ups generate £196 billion for the UK economy each year.

The UK’s culture of entrepreneurship, particularly in certain sectors such as technology, has continued to grow over the last 20 years. But more could be achieved if government was to implement further policies designed to facilitate the conditions to supercharge economic growth.

At present, the Government provides significant tax reliefs for investors investing into early stage businesses via the Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS). These respectively provide for 50% and 30% tax income and capital gains reliefs, provided detailed strict conditions are met.

But these reliefs are available only to investors in start-ups and not the founders of the businesses themselves. For example, under the SEIS scheme, if a person is an employee of the business in question or owns more than 30% of that business, then he or she is not eligible for such relief. In effect, these reliefs have been deliberately constructed to incentivise investment from passive investors, but not the founders themselves.

This urgently needs to be revisited.

Consideration should now be given to these reliefs being expanded to enable founders of new businesses to obtain income and capital gains tax relief when starting those businesses. The numbers would of course need to be properly modelled, but by way of example, a scheme could be launched which would enable a founder to claim back or set off against past and future income and/or capital gains tax a certain proportion of their start-up costs up to a defined cap.

This policy, if properly constructed and modelled, could provide entrepreneurs with a material additional incentive to take the plunge and start a new business.

In particular, such a policy could help to drive entrepreneurship amongst older people who have significant prior income to obtain relief against, and are considering a second career as they head towards the end of their first. This is relevant bearing in mind that people are living longer and will need to engineer novel ways of funding a longer retirement.

Such a policy could be made tax neutral, either by limiting the current scope of EIS and SEIS reliefs for investors “on the way in”, or modifying entrepreneur’s relief, which enables a founder of a business to obtain certain tax reliefs at the time of exiting his or her business.

Expanding tax reliefs to the founders or owners of a business in this manner could reduce the barriers to entry to starting a new business, drive a further wave of entrepreneurial activity across the country, and in time allow many new businesses to prosper and to create significant wealth throughout our economy.

Anyone who champions entrepreneurship and small business should support the introduction of such an “entrepreneur’s tax relief”.

Anthony Shatz is a member of Bright Blue and is a partner at Fladgate, a full-service law firm based in London. The views expressed in this article are those of the author, not necessarily those of Bright Blue.