Reform UK has announced plans to introduce tax breaks for parents and family members who invest in their relatives' start-up businesses. The proposal, part of a strategy to revitalize struggling small businesses in the UK, would allow family investors to receive income and capital gains tax relief.
Under the proposed expansion of the Seed Enterprise Investment Scheme (SEIS), family members could invest up to £250,000 in a relative's business. Investors would be eligible for an income tax rebate of 50 percent and an exemption from capital gains tax if they hold their shares for three years. Reform argues this initiative, alongside scrapping GDPR regulations and adopting a New Zealand-modelled framework, would position Britain as a leading global hub for business creation and growth.
Robert Jenrick, Reform's treasury spokesperson, stated that for too long governments have prioritized large corporations, neglecting small businesses. He asserted that Reform UK views the nation's 6 million small businesses as the bedrock of the economy and is committed to their support. Nigel Farage echoed this sentiment, criticizing what he described as years of punitive taxes and EU red tape that have "suffocated" small enterprises.
However, the Conservative Party has labeled the proposals an "unfunded gimmick." Shadow chancellor Sir Mel Stride expressed concern that the plan could lead to "vast tax planning" and suggested it would ultimately result in higher taxes for the general public. Stuart Adam, a senior economist at the Institute for Fiscal Studies, questioned the scheme's effectiveness, warning that families might exploit it for personal financial gain rather than genuine commercial investment.
Recent figures from the Federation of Small Businesses indicate that only about one in six small businesses anticipate growth in the coming year. Separately, a report from the Adam Smith Institute suggested that GDPR regulations may have negatively impacted the UK economy.
Reform UK's broader economic platform includes reversing recent national insurance increases for workers, repealing inheritance tax rises on family businesses and farms, and scrapping the Electric Vehicle Mandate. The party also proposes a "Hard Work Bonus" by eliminating income tax on overtime hours exceeding 40 hours per week for individuals earning under £75,000. Additionally, Reform aims to increase the VAT registration threshold for small businesses from £90,000 to £150,000 and introduce a £2,000 "Apprentice Retention Bonus" for firms that retain apprentices for two years post-completion of their training.