Contract with Small Business

Overview

This document, titled Contract with Small Business, sets out Reform UK’s policy programme intended to reduce costs and regulation for small and medium-sized enterprises. It frames the problem as weak business dynamism and high operating costs, citing figures such as 5.7 million small-to-medium enterprises employing 16.9 million people, and a VAT registration threshold frozen at £90,000. The paper argues that tax thresholds, employment rules, energy policy and regulation have together made it harder for firms to grow. The package would change tax and regulatory settings across several areas. Key tax changes include raising the VAT registration threshold to £150,000, cutting employer National Insurance from 15% to 13.8%, and expanding seed investment tax reliefs to allow parents and grandparents to claim SEIS relief. Labour-market measures include a Hard Work Bonus removing income tax from overtime for employees earning under £75,000, repeal of the Employment Rights Act, and a suite of apprenticeship wage credits and retention bonuses. On energy and regulation, the party would scrap Net Zero rules, remove renewables obligations and scrap planned fuel duty increases, and repeal the UK GDPR. The proposals are wide-ranging: they affect fiscal receipts, employment costs, business governance, financial support for start-ups and the regulatory environment for data and environmental policy. Some measures are quantitatively costed within the document, notably a stated £2.4 billion annual cost for the VAT threshold rise and an estimated £63 million per year additional cost from widening SEIS; many other items are described without full fiscal estimates or implementation detail. Delivery would require primary legislation, changes to departmental administration and adjustments to tax reliefs administered by HMRC.

Key commitments

• Raise the VAT registration threshold from £90,000 to £150,000, indexed to inflation; this would immediately remove VAT registration obligations from roughly 320,000 sole traders and small businesses and is stated to cost £2.4 billion a year. Reform UK will raise the VAT registration threshold from £90,000 to £150,000, rising with inflation. This costs £2.4 billion a year, but this is not money lost to the economy; it stays with the tradesmen who earn it and the households who hire them. (page 7)
• Introduce a Hard Work Bonus so employees earning under £75,000 pay no income tax on overtime above a 40-hour week; the document says this increases net hourly pay for overtime by 25–67% and gives an illustrative annual gain of £700 for a specific example. Under Reform’s Hard Work Bonus, employees earning under £75,000 would pay no income tax on overtime worked above a 40-hour week. (page 7)
• Cut the employer National Insurance contribution rate from 15% back to 13.8%; Reform says this will be fully funded by a new Employers’ Migrant Labour Levy, reducing the direct cost of hiring for small firms. We would cut the employer NIC rate from 15% back to 13.8%. This reversal would be fully-funded by a new Employers’ Migrant Labour Levy. (page 10)
• Introduce apprenticeship support: a 30% Apprenticeship Wage Credit for firms with annual pay bills below £3 million, described as worth about £4,742 a year per 16–18-year-old apprentice, and a £2,000 retention bonus payable to an apprentice who stays with the same small employer for two years after qualifying. So, Reform would introduce a 30% Apprenticeship Wage Credit for firms with annual pay bills below £3 million. The business would receive 30% of a 16-18-year-old apprentice’s statutory minimum wage back from the Government. That is worth about £4,742 a year... an apprentice who remains with the same small employer for two years after qualifying would receive a £2,000 retention bonus. (page 10)
• Expand the Seed Enterprise Investment Scheme to allow parents and grandparents to receive SEIS tax relief on investments in relatives’ small businesses, subject to anti-avoidance rules; the document estimates a central additional cost of about £63 million per year. To make sure more entrepreneurs can access capital, Reform will expand the eligibility for SEIS to allow parents and grandparents to invest in small businesses and receive tax relief. ... Our central estimate is that this policy might increase the cost of SEIS by 50%... Therefore, our central estimate of the additional cost is £63 million per year. (page 13)
• Scrap Net Zero rules, remove renewables obligations and green levies, enable further North Sea drilling, and permanently cancel the planned 5p increase in fuel duty; the measures are presented as reductions to business energy and fuel costs. Reform will scrap the Net Zero rules that are driving these costs up. ... We will scrap the Renewables Obligations and green levies that drive up business bills. ... We will also permanently scrap the forthcoming 5p increase to fuel duty. (page 12)
• Reduce the obligations and liabilities on Non‑Executive Directors of small companies, including amending the Companies Act to establish a new category of 'small company non-executive director' with a cap on personal civil liability, to encourage mentoring and board-level support. (page 13)
• Ease regulatory burden by repealing the UK GDPR and replacing it with a New Zealand-style privacy law and by scrapping zero-emission van mandates so small firms adopt technology when commercially sensible. Reform would scrap the GDPR and replace it with a New Zealand-style privacy law. (page 14)

What it would cost

The document quantifies only a small subset of fiscal impacts. It states explicitly that raising the VAT registration threshold to £150,000 would cost £2.4 billion a year, and it gives a central estimate that expanding SEIS to parents and grandparents would increase SEIS costs by about £63 million per year (it notes SEIS currently costs £125 million annually). The apprenticeship measure is given per-beneficiary values: a 30% wage credit is described as worth about £4,742 a year for a 16–18-year-old apprentice, and the retention bonus is a £2,000 one-off payment. Many major items lack whole-programme costings: the document does not provide an overall price tag or a fiscal estimate for the employer NIC cut or the proposed Employers’ Migrant Labour Levy, nor for the Hard Work Bonus in aggregate. The fiscal effects of scrapping Net Zero rules, removing renewables obligations, increasing North Sea drilling or repealing UK GDPR are not monetised; the paper cites an unrelated forecast that subsidies and grid integration could cost £40 billion a year by 2030, but it does not quantify the savings or transition costs from its proposals. Funding is identified in one case only: the NIC reversal is said to be funded by the Employers’ Migrant Labour Levy; elsewhere funding sources are not specified, leaving the net fiscal impact of the package unclear.

How it would be delivered

The document assigns delivery responsibilities largely to central government departments and to HMRC where tax administration is affected. Changes to tax thresholds, employer NICs and SEIS eligibility would require primary legislation and amendments to tax administration rules, with HMRC responsible for administering SEIS and VAT registration and for any new 'delay repay' arrangements it is asked to run. The Apprenticeship Service is named as the existing body to be replaced by a simpler one-stop system, implying the Department for Education or its apprenticeships agencies would implement the changes. Repeal of the Employment Rights Act, the UK GDPR and introduction of a New Zealand-style privacy law would require Acts of Parliament and changes to regulatory frameworks. Amendments to the Companies Act and any cap on non-executive director liability likewise require statutory change. The document refers to HMRC’s departmental baseline covering costs of service improvements and suggests internal administrative changes, such as allowing written Time To Pay negotiations and keeping case managers assigned for longer. Timetables for enactment or transitional arrangements are not set out, and the document does not name an administering body for the proposed Employers’ Migrant Labour Levy or provide operational detail on anti-avoidance rules for SEIS expansion.

What isn't specified

The paper leaves several significant implementation and fiscal details unspecified. Many headline measures lack full cost estimates: the employer NIC cut, the aggregate cost of the Hard Work Bonus, the total cost of the apprenticeship wage-credit programme and the fiscal effect of repealing Net Zero-related levies are not quantified. The document proposes financing the NIC reversal via a new Employers’ Migrant Labour Levy but does not define who collects it, its rate, or its legal basis. Anti-avoidance rules for extending SEIS to relatives are referenced but not described. Several legislative actions are proposed, repealing the Employment Rights Act, the UK GDPR, and amending the Companies Act, but no legislative timetable, parliamentary route or transitional arrangements are given. Operational details for the HMRC 'delay repay' proposal, including whether and how taxpayers would claim payments and what administrative cost this would impose on HMRC, are not specified. The interaction of the energy-policy changes with existing contracts, regulator responsibilities and obligations under international agreements is not addressed.

Language and firmness

The document uses a mixture of definitive and conditional language. Many headline promises are framed with firm verbs such as 'will' and 'will raise': for example, 'Reform UK will raise the VAT registration threshold...' (page 7) and 'Reform will scrap the Net Zero rules...' (page 12). Several policy details are expressed more conditionally with 'would' or 'we would', for instance 'Under Reform’s Hard Work Bonus, employees ... would pay no income tax...' (page 7) and 'We would cut the employer NIC rate...' (page 10). Where administrative adjustments are discussed, the tone is prescriptive and practical, for example proposing that 'the cost of any required adjustments would be met from within HMRC’s departmental baseline' (page 9). Overall, core programme commitments use 'will' while many implementation details and funding arrangements are framed as 'would' or left descriptive rather than prescriptive.