Majority of businesses fear business taxes will rise under new Labour leadership

More than half of businesses (54%) expect business taxes to go up as a result of the change in the Labour leadership, according to a new survey released by accountancy and business advisory firm BDO.

The data from BDO’s Mid-Market Tracker, a bi-monthly survey of 500 UK mid-sized businesses with revenues between £10m - £500m, reveals that while a majority expect business taxes to rise, almost a third (32%) of respondents said they expected them to remain at current levels until the end of the Parliament.

In total, only 13% of business leaders said they expected business taxes to go down while 1% were unsure.

The figures are published following the release of BDO’s Mid-Market Manifesto, which proposes a series of policy recommendations to help drive growth in Britain’s mid-market business sector.

Despite comprising less than 1% of private sector businesses, the UK mid-market accounts for more than one in three private sector jobs and more than 40% of private sector revenues, demonstrating the outsized contribution it makes to the UK economy.

Among the recommendations is a proposal to simplify corporation tax by replacing the current main rate and marginal relief system with a single rate of 21%, just below the EU average of 21.6%.

In BDO’s view, this simpler corporation tax regime would support investment by reducing uncertainty, lowering compliance burdens and giving businesses greater confidence over the tax implications of growth.

Paul Townson, BDO tax partner said: “It’s clear that many businesses are concerned about the tax implications of the change in the Labour leadership. This is at a time when many are already struggling with both high taxes and high compliance costs.

“However, the incoming administration has an opportunity to do some fresh thinking on how best to drive growth in the UK economy which has recently proved elusive.

“Currently the UK tax code is too long, too complex and in urgent need of simplification.

“Simplifying the corporation tax regime with a single rate of 21% would incur a cost but we believe this would be offset by the benefits gained from incentivising investment and the resulting increase in tax revenues generated through supporting long-term employment.”

Other policy recommendations in BDO’s Mid-Market Manifesto include:

• Further proposals to simplify the tax regime to promote investment, boost employment, and back entrepreneurship.
• Measures to address skill shortages across sectors and regions, including protecting access to apprenticeships for priority technical skills, ensuring mid-market firms have access to more flexible training, and prioritising the roll out of the government’s proposed “clearance-style” apprenticeship pilot scheme.
• Sector-specific policy suggestions to support businesses in several of the growth-driving sectors identified in the government’s Invest 2035 Modern Industrial Strategy where the UK has or could develop a competitive advantage: Advanced Manufacturing; Life Sciences; and Professional & Business Services.

 

ENDS

Note to editors

The survey was conducted by Censuswide on behalf of BDO between 24 June and 2 July. There were 500 C-Suite respondents from mid-market businesses.

The mid-market is defined by BDO as businesses with revenues of £10m-£500m including those that are AIM listed or private equity owned.

BDO LLP operates in 19 offices across the UK and Ireland, employing 8,500 people. It has revenues of £1.1bn.

It provides Audit, Tax, Deals, and Consulting, Risk & Outsourcing (CR&O) services predominantly to the entrepreneurial, ambitious and growing mid-sized businesses that are driving growth in the UK and Ireland economies.

BDO LLP is the UK and Ireland member firm of the BDO Global network.

BDO Global

The BDO international network provides business advisory services in 169 countries and territories, with 95,000 people working out of 870 offices worldwide. It has revenues of US$11bn.

Contact

Frank Shepherd
Senior PR Manager
frank.x.shepherd@bdo.co.uk

media@bdo.co.uk

www.bdo.co.uk