ATT responds to Call for Evidence on how the UK tax system supports entrepreneurs

Following the Autumn Budget, HM Treasury published a Call for Evidence to gather responses to influence the development of tax policy on supporting business investment in the UK. The Call for Evidence focuses on three key areas: scaling UK successes, how tax policy shapes entrepreneurial success and building a world leading ecosystem for entrepreneurship.

HM Treasury asked for views on the success of venture capital schemes (such as the Enterprise Investment Scheme and Venture Capital Trusts) and tax-advantaged share schemes for scaling companies (specifically the Enterprise Management Incentive). Feedback was also sought on what additional ways the UK's tax system could strengthen the pipeline of business investment in the UK.

In the ATT response, we welcomed the increase in scheme limits for VCT and EIS from April 2026, which will allow more companies to grow in terms of size and headcount without losing their eligibility for tax reliefs. However, we noted the ‘all or nothing’ nature of these reliefs, which means that if a company goes over the threshold for only one of the conditions, even by a small amount, the investment will no longer qualify for relief. 

We therefore proposed an alternative approach of a minimum number of conditions, rather than requiring all conditions to be met. This follows a similar approach to that used for determining a micro, small or medium sized entity for company accounts purposes.

In terms of other ways to support entrepreneurship, we suggested that there should be greater publicising of employee share schemes and the tax incentives for investing. We also highlighted the potential use of a 'small company' ISA to help strengthen investment in the UK and the need for the UK tax system to better support smaller businesses who start as sole traders or micro businesses.

Although not directly referred to in the Call for Evidence, we drew attention to the need for the government to consider employment status and its impact on the growth of businesses in the UK. By introducing a statutory classification, businesses would have better certainty over the treatment of all those who carry out work for them, which would mean that they could have confidence that decisions taken will not result in unanticipated liabilities arising at a later date due to a lack of clarity over whether an individual should be treated as a contractor, worker or employee.