Home Finance & Investments ‘Christmas will come early’ – if we avoid Budget tax hikes

‘Christmas will come early’ – if we avoid Budget tax hikes

One in three (31%) mid-market businesses believe the increased tax burden is a top threat to future growth, according to a survey ahead of the Chancellor’s Autumn Budget.

The findings from business advisory group Grant Thornton show that the increased tax burden is considered as serious a challenge as digital security and cyber attacks. They are based on the views of 605 businesses around the country.

Businesses have already been hit this year with the upcoming rise in corporation tax to 25%, announced in the March Budget, and the recent announcement of a rise in National Insurance from April 2022 to help fund the health and social care sectors.

With changing tax policy placing ever greater strain on business finances, the survey found that the policies the mid-market would most like to see introduced by government to support business growth are led by measures to improve infrastructure (32%) and incentives for employers to invest in skills attraction and development (31%).

Backing for low carbon business strategies (30%), measures to level up the UK economy with more devolved powers (30%) and simplification of UK business tax systems (30%) all scored highly.

Carl Williams, practice leader for Grant Thornton, which in Liverpool operates from a base in the Liver Building, said: “The tax rising burden is an obvious concern for the region and, given the upheavals the economy has experienced, it would be a case of Christmas has come early if we can avoid further tax hikes.

“Perhaps the best we can hope for, however, is a careful balancing act from the Chancellor. North West businesses are already batting a perfect storm of issues from supply chain disruption, rising tax burden, lack of talent, increasing energy prices and rising uncertainty as we move towards winter.

“To gain the confidence of UK businesses, the government will need to show that they are able to deliver a clear path to, not just recovery, but also growth. Our research shows, businesses have long favoured a simplified UK tax system but, as the tax burden grows, we are yet to see any progress in this area.”

With COP26 on the horizon and the publication of the government’s Net Zero Strategy last week, the survey data also shows that’s still a lot of work to be done around low carbon business strategies.

“The excellent news that the HyNet North West carbon capture project in Ellesmere Port has just gained ‘Track One’ status from the Government could have a transformational impact on our region, creating one of the world’s first low-carbon industrial clusters.

“We know from our own research that only 51% of mid-sized businesses have a net zero carbon strategy in place. To shift the dial in this area and to engage the market effectively in taking action, policy setters need to share clearer guidance that helps businesses to integrate net zero strategies into their operations, ensures the mid-market has access to funds and projects, and consolidates relevant reporting frameworks and standards, ” Carl Williams added.