Small businesses 'should be given two-year tax holiday'

Date: 25th August 2009

Small businesses should be granted a holiday from taxation for their first two years, a leading entrepreneur has argued.

Private investor and Dragons' Den panellist James Caan has stated that such a break from taxation could help would-be entrepreneurs to set up a new business despite the current economic climate.

Speaking to Real Business magazine, the multi-millionaire claimed that tax is often a make-or-break issue for most entrepreneurs.

This is because many have borrowed money from friends or family so as to get their enterprise off the ground, only to see a massive proportion of their first year's takings eaten up by the tax man.

"Tax can make the difference between someone deciding to start a business and them deciding not to," Mr Caan said.

"The obvious answer is to offer a package of tax breaks to help fledgling entrepreneurs through that early period. Income tax, national insurance and business rates could all be suspended."

The comments come soon after the Confederation of British Industry called for the government to offer cash incentives for small businesses to take on apprentices so as to tackle the problem of rising youth unemployment.