UK Businesses Call for More Favourable Tax System than China & Other Economic Rivals

Nearly half of the United Kingdom’s businesses have expressed concern about the nation’s tax system, labelling it ‘unfavourable’. These businesses feel that the UK’s current tax regime gives our primary competitors like China an undue edge, the Daily Mail reports.

Manufacturers Seek Major Reform in the Autumn Budget

Leading the charge for this overhaul are the UK’s manufacturers. They wish to see significant reform in the Autumn Budget next month, in a bid to revive the economy and steer it out of the existing sluggishness.

The above conclusion stems from a survey conducted by Make UK, a leading manufacturing group, and RSM, a prominent consulting firm. Their findings point to a widespread lack of confidence in the UK’s current tax and regulatory systems. Of the companies surveyed, almost 44% believe that these systems are not only unfavourable but could be undermining the country’s business competitiveness.

Notably, 28% of the companies perceive the UK’s business environment to fall short when compared to China, while others believe it’s even worse than Germany (26%), the United States (27%), France (23%), and Italy (21%).

A Cry for Simplification and Competitive Corporate Tax System

Firms are pleading for an overhaul, starting first by simplifying the tax structure and regulations. Key among their requests is the need for a competitive corporate tax system and the introduction of tax credits for Research & Development (R&D) activities carried out in the UK.

Tax expert, Dan Neidle, revealed in his recent analysis that companies now pay a higher proportion of their profits in tax to the government, or exchequer, compared to the 1970s.

Figures such as this have led to the UK’s Chancellor, Jeremy Hunt, confirming last week that if given a choice, he would lean towards reducing business taxes over other areas. However, he cautioned that the nation is not currently in a position to entertain that discussion.

‘The Need to Make The System Work for Businesses’

Fhaheen Khan, a key voice from Make UK, encapsulated the sentiment of manufacturers when he said, “Manufacturers are clear that many aspects of the current tax and regulatory system are not fit for purpose and are failing to promote vital investment.”

He continued, “We cannot keep up the current inconsistency in policy if we hope to revitalise the economy and encourage long-term growth. The government must urgently revise the current regime to make it work for businesses.”

Echoing this sentiment, Mike Thornton, RSM’s head of manufacturing, also emphasised the clear correlation between tax, regulation, and economic growth. He pointed out how the current framework is viewed as a burden, placing the UK industry at a disadvantage.

Further Dip in Business Confidence, Output and Hiring Intentions

These calls for reform are echoed in a separate report from advisory firm BDO. Their report warned that business confidence, output, and hiring intentions had all fared poorly in September.

This sentiment was encapsulated by Kaley Crossthwaite, a partner at BDO, who said: “With the threat of a recession, businesses are understandably feeling the pressure. More needs to be done to offer businesses support.”

In light of the ongoing global situation, it seems clear that for UK businesses to meet their potential, and to compete on even footing with their international rivals, addressing these concerns around the nation’s tax system must be high on the agenda. It is essential that the UK Government acknowledges these issues and takes definitive action to foster a more favourable environment for business growth and competitiveness.