In the run up to the general election on May 7th, Simpleweb has been asking CEOs, investors, accountants and other people on the startup scene about the effect that the election could have on startups and small businesses.

We asked everyone the same question and got a range of answers. So without further ado…

“How will the result of the general election affect startups and small businesses?”

Judith Clegg

Founder & CEO of Takeout and The Glasshouse

judithclegg“I hope that initiatives like Martha Lane Fox’s DOT EVERYONE will help to make sure that all parties focus on the priorities that are essential to making the UK a world leader in tech and startups whatever the outcome of the election.

DOT EVERYONE’s priorities are:

1. Improving understanding of the Internet at all levels of society
2. Getting more women involved in tech
3. Tackling the moral and ethical issues which the Internet has created

In a world where Tech impacts all of life and business, ensuring that the UK fulfills our potential to be the best in the world at Tech is of critical importance.

I’d also like to see all parties focusing on values that surely we should all be aspiring to – fairness and kindness in business. To my mind these can and should go hand in hand with excellence and innovation.”

Nick Sturge

Centre Director at business incubator The Bristol SETsquared Centre

nicksturge“The last thing most businesses want is dramatic change – especially when its change for change’s sake. The current outlook is for a hung or minority government, so even another general election at the back end of 2015 – and that means that significant change will be unlikely. The biggest effect will be what the markets do – inflation, interest rates, exchange rates and business (i.e. purchasing) confidence. There is a risk that uncertainty will mean a weakened pound which makes export tougher. What we would like to see is a tweak to the new EU VAT ‘mini one stop shop’ arrangement such that small businesses are excluded from this scheme that is currently killing export.”

David Maher Roberts

Founder & Managing Partner at Digital DNA, Strategic Advisor, Angel Investor

DavidMaherRobers“Small businesses and startups are most helped by a mixture of things:
(i) reduction in red tape and admin – essentially reducing the cost of doing business,
(ii) easing access to money and funding
(iii) making it easy to get the talent that is needed, wherever that talent may come from
(iv) incentivising and rewarding success (by reducing tax on business and tax on entrepreneurs should they sell their business)”

Simon Bruce

Senior Partner at accounting firm White Bruce

Simonbruce“I think that startups and small businesses have benefited from many of the tax and NI changes that the Coalition Government have introduced in the past few years. They have been able to take advantage of the Seed Enterprise Investment Scheme (SEIS), Enterprise Investment Scheme (EIS), R&D tax credits system, NIC Employment Allowance, and Capital Allowances. At the same time the wider economy has had record low levels of inflation, minimal bank interest rates and in the last 18 months a resurgence in demand for products and services.

Assuming that nothing dramatic happens to the general economic picture i.e. continuing low inflation, low bank rates and a slowly improving world economy, then the big questions are what will the next Government choose to do about raising additional revenue for the public purse and from where will it be raised. Any increase in taxation, whether it is from VAT, Income Tax, National Insurance, or Corporation Tax is likely to take money out of the economy which will have a depressing effect upon the rate of growth of the economy overall. This will affect smaller businesses.

Both main parties have declared themselves the friend of start ups and small business. My concern is that come 8th May whoever forms the next Government may have to water down some of their pre-election tax promises in order to form a working majority in Parliament. The less clear the result of the election the greater the amount of horse trading that will take place. Inevitably that will mean more short term decisions concerning taxation and a potential loss of support to startups and smaller businesses.”

Jon Ellis

CEO of Tutorhub

jonellis“It’s time for politicians to get a grip! We need a Government that truly encourages start-ups, as we are the medium and large sized businesses of the future.

If the Government really wants to encourage start-ups it should introduce:

– Zero business rates
– Zero employers national insurance
– Waiver for charging VAT to customers

Doing this for the first five years would reduce spend when cash is really tight.

I would also like to see extended relief of EIS and EMI schemes.

Like most startups, we don’t pay Corporation Tax (yet), but we do pay National Insurance and VAT. I want to spend time growing my business, not acting as an unpaid tax collector for the Government.”

Phil Smith

Managing Director of Business West

philsmith“Many businesses looking to invest need to be reassured about the economic and hence political context ahead before they plunge even more effort and cash into growing their business.

The run up to general elections and referendums normally create economic uncertainty which in turn is not welcomed by small businesses who are already trying to deal with enough of their own unknowns. However, one gets the feeling that the uncertainty this time may extend into the post election period with the possibilities of a hung parliament and fragile majority.”

Sam Sethi

Founder at CTO of

samsethi“1. Funding

The EIS scheme was hijacked by incumbent VC in the last parliament so individual investors could no longer directly invest into startups. They now had to invest into syndicates who then invest in their behalf. This has created another barrier for startups looking for funding.

s-EIS too low at £150k. This needs to raise to £250k (95% tax relief) and EIS (70% tax relief) needs to stay at £10m. An m-EIS (85% tax relief) is needed to help startups raise the dreaded £500k – £3m series A round.

The changes to the pension announced today [6th April] mean potentially more money will be floating around looking for an alternative (more risk/return) which might help with the flow of funding.

Overall there is nothing I am aware of that will help startups from the recent budget. The next government of any colour will offer very little more than sound bites such as small business and entrepreneurship are important blah blah blah.

I do think regional government tax relief and match funding may help move companies out of the London tech bubble.

2. Employees

The need for all employees to be in a pension scheme will force costs up for startups.

3. Tax

A reduction in NI would really help as this is the hidden wage tax that people forget when they employ more people.

An increase in the minimum wage is great but it won’t help startups other than maybe helping set a minimum pay bar for interns.

A big help would be tax breaks for offsetting training costs.

Tax R&D is useful and maybe it could be extended to encourage more development.

4. EU referendum

The uncertainty of an EU referendum will hang over the economy until 2017. What effect if any on startups is uncertain.

The bigger problems for startups still exist. Funding funding funding. The reason the UK will never have successful startups like Facebook, Twitter, WhatsApp, SnapChat, Pinterest, Meerkat, Tinder etc is the lack of initial funding to give UK startups a real chance to be global.

The VC community in the UK is still the same 10 years on. Shortsighted tight with funds and looking for rapid revenues.

The election will not change much.”


While no-one was willing to tell us who they were going to vote for, there were a few common thoughts on policies that could help small businesses and startups.

For most people we asked, reducing business taxes was one of the most valuable ways the Government could support small businesses and startups. While most of the main parties have plans to tackle corporation tax and other business taxes, their policies differ greatly. Check out this comparison of the major parties’ stances on business taxes from Smith Williamson.

We’ve been busy asking local candidates how their parties intend to support small businesses and startups. Sign up for our email digest to the right of this post to see what they say.

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