A new report ‘Think Small’, from the Centre of Policy Studies, is arguing that companies with revenue of under £1m should be given the option to replace corporation tax, business rates, VAT and employer’s National Insurance with a simple levy on turnover, charged on a cash basis – the Simple Consolidated Tax (SCT).
As the SCT would be voluntary; it is being suggested that no firm would have to lose out, as those who would be worse off under the new system could simply keep to the old.
Extensive modelling by Capital Economics shows that the SCT would be revenue-neutral for the Treasury at a rate of between 11.5% and 13.5%.
The report says moving to a SCT would help make life a lot easier for small companies, 75% of whom it surveyed said the current tax regime is too complicated.
Other innovative suggestions to help small businesses and sole traders include a three-month NI holiday on new hires for any business with eight or fewer employees and tax relief for self-funded training for sole traders.