Britain’s current tax system is actively stifling business founders and requires immediate, structural reform if the government wishes to encourage people across Yorkshire to start, scale, and sell businesses, an industry expert has warned.
Praveen Gupta, the UK Head of Tax at international accounting and business advisory group Azets, which operates major Yorkshire offices in Leeds, Bradford, and York, argues that the existing regime is draining the economic optimism needed to drive national growth.
“There is no incentive to set up, scale and sell a business in the UK,” Gupta stated. “It costs more than ever to recruit staff and if you are able to sell your company, the Treasury takes a bigger slice of the proceeds than it has in decades. We understand the government needs to balance the books, but right now the tax system is preventing entrepreneurs from doing what they do best and the economy is suffering as a result.”
Gupta warned of a looming talent drain, pointing out that the UK risks losing its future business leaders because they will either move their operations overseas or decide against launching a start-up altogether.
To counter this threat, Gupta has proposed a four-point policy solution to unshackle the UK’s small-and-medium enterprise (SME) sector:
- Raise the Employment Allowance rate to £50,000: Under this change, an employer would not pay National Insurance contributions until their total wage bill exceeded £333,333, down from the current threshold of roughly £70,000. Gupta says this single adjustment would dramatically reduce overheads and give local firms the confidence to recruit.
- Slash Capital Gains Tax (CGT) to 10% for individuals selling an active business.
- Restore the Business Asset Disposal Relief (BADR) lifetime limit back to £5 million.
- Introduce a rolling two-year Employment Tax Roadmap to give founders the stability needed to forecast and budget effectively, avoiding the abrupt policy shifts seen in recent Budgets.
Gupta believes that any immediate drop in Treasury revenues from these tax cuts would be quickly balanced out by the resulting economic activity.
“Entrepreneurs typically don’t retire – many of them invest some of their hard-earned money from selling their businesses into start-ups or new companies looking to scale,” Gupta explained. “Taking less of the money they make from selling a company would give them a larger amount to invest in new businesses, effectively creating an army of business angels who could help the entrepreneurs of the future grow.”
The warnings are supported by sobering corporate data analysed by Azets. Figures from Companies House show that there were nearly 13,700 fewer company incorporations in 2025 than in 2024. Furthermore, data from the Office for National Statistics (ONS) reveals that there were an estimated 104,000 fewer payrolled employees between March 2025 and March 2026, alongside a drop of 65,000 vacancies compared to the previous year.
Compounding the problem is a notable demographic shift; ONS figures indicate that approximately 75,000 more people aged 16 to 34 left Britain than arrived in 2025, a growing net-departure gap that has widened every year since 2022.
“If the UK wants to avoid its entrepreneurs becoming an endangered species and really fuel economic growth, the government needs to take action now and evolve the tax system into something that encourages rather than stifles entrepreneurs,” Gupta concluded.
With 191,000 active VAT and/or PAYE-registered businesses operating across Yorkshire and the Humber, local advisory teams are urging the Treasury to act before more firms are forced to close their doors.
