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MOD003311 Academic Research and Writing

   

Added on  2020-04-15

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Running head: ONE YEAR TAX EXEMPTION FOR FIRST TIME BUSINESS OWNERSOne-Year Tax Exemption for First Time Business OwnersName of the UniversityName of the StudentAuthor Note

1ONE-YEAR TAX EXEMPTION FOR FIRST TIME BUSINESS OWNERSIntroductionThe United Kingdom is one of world’s best places to start a business. Whether one plansto start a small business or big, UK provides many opportunities for everyone. However, afterBrexit, that is Britain’s exit from the European Union, businesses in UK have received a blow.The Brexit has certainly created a fissure in UK’s business sector (Britishchambers.org.uk 2017).Other than Brexit repercussions, complex tax norms are also a problem that is faced bybusinesses in the UK especially small businesses. The essay puts forward plans that can be implemented to reassure the businesses to stayin UK. One-year tax exemption for first time business owners will boost the economy.Business scenario in UKIn June 2016, the people of Britain made a historic decision when they voted for Britain’sexit from the European Union. Among the 71.8% participant in the election, 51.4% voted forLeave while 48.6% voted Remain(BBC News 2017). The business community in particular,faced great troubles after Brexit. However, things began to normalize after a year and a half andthe economy has been stable. Another concern for businesses especially small businesses in UK are the different taxesimposed upon them. The taxations system in the UK for small business involves corporation tax,national insurance contributions, sole trading tax, local business tax and value added tax (VAT)amongst others. Pope and Waters, (2014) in their survey of the United Kingdom Tax Systemhighlighted the revenues earned by the government through taxes. Their survey revealed VAT,National Insurance Contributions and Income Tax to be the highest contributors to governmentrevenues for the 2016-2017 fiscal years.

2ONE-YEAR TAX EXEMPTION FOR FIRST TIME BUSINESS OWNERSHowever, the recent news of hike in tax rates has hit the SMEs severely; believe experts(Card, 2017). Philip Hammond, in his first budget announcement declared that there would be arise in the NICs paid by small business owners and self-employed citizens. The decision hasbeen criticized by many especially the small business owners. Although the chancellor claimedthat the new changes in taxation system would boost the economy, it remains to be seen whetherthe SMEs will be benefitted by it or not. On one hand, the businesses are hit by tax increase and on the other, many experts arguethat UK has a better taxation system than in many developed nations. According to a survey byUK’s leading newspaper, an individual or small business who earns 100, 000 pounds a year hasto give away 34.3% of his or their income as tax(Collinson 2017). Nonetheless, the tax-freeallowance provided to the low-income businesses is higher than in majority of countries, foundthe survey. The disparity between the actual situation of small businesses and several surveys showsthat there needs to be an alteration in the taxation system especially for the first time businessowners.Tax levied by government on business ownersMentioned earlier in the essay, the UK government levies different taxes on businessowners. The prominent taxes include Corporation Tax, National Insurance Contributions andVAT. Corporation Tax – this type of tax is paid by limited companies, any company that has abranch in the UK, a cooperative or a club. Corporation Tax has to be paid irrespective of theduration of the business one does. First time business owners may have to take help from

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