SMEs call for tax cuts ahead of Autumn Budget, Bibby finds

More than half of UK SMEs are delaying major investment decisions until after the Autumn Budget, as businesses seek greater certainty over taxation and operating costs, according to new research from Bibby Financial Services (BFS).

The latest BFS SME Confidence Tracker reveals that reducing the cost of doing business is the leading priority for small and medium-sized enterprises ahead of Prime Minister Andy Burnham and Chancellor John Healey’s first Autumn Budget.

Almost half (46%) of SMEs want the Government to cut corporation tax, while 43% are calling for a commitment to avoid further increases.

Other priorities include freezing capital gains tax (41%), reversing increases to employers’ National Insurance contributions (39%) and extending business rates relief beyond the retail, hospitality and leisure sectors (36%).

The findings highlight growing concerns about the impact of taxation on business investment, cashflow and growth.

According to the research, 54% of SMEs are postponing major investment decisions until after the Budget, while just one in five believe the Government’s forthcoming fiscal announcements will benefit their business.

Derek Ryan, CEO for North West Europe at Bibby Financial Services, said:

“Prime Minister Andy Burnham has said he wants the UK to be the most ‘pro-business country in the world’. If he’s serious, he must lower the cost of operating.

“That means cutting corporation tax, or at the very least guaranteeing it won’t rise again and reversing the increase in employer National Insurance. Extending business rates relief beyond retail, hospitality and leisure would also ease pressure on cashflow, free up working capital and remove a major barrier to growth.”

The research suggests that uncertainty surrounding future tax policy is influencing businesses’ willingness to commit funding to expansion, recruitment and equipment investment.

Ryan warned that continued uncertainty risks holding back the investment needed to support economic growth.

“SMEs have heard pro-business promises before and been let down. Now they are waiting to see whether this Government will deliver. More than half of SMEs are holding back major investment until after the Budget, unable to plan for growth without knowing what their tax bill will look like.

“That’s money not being spent on new equipment, new hires, and new products, which is exactly the activity this Government says it wants to unlock.”

He added that businesses need greater stability and a reduction in the tax burden to unlock investment.

“SMEs don’t lack ambition. What’s holding them back is the weight of the current tax burden. Ease that burden, give them stability, and they’ll invest.”

The findings underline the importance of the forthcoming Budget for SME confidence, with businesses looking for measures that ease financial pressures and provide greater certainty for future investment decisions.