Businesses across the West Midlands are confident the Budget will help drive economic growth but are much less optimistic that it will positively impact their own businesses, according to a Budget reaction poll by BDO LLP and PKF (UK) LLP, the accountancy and business advisory firms which are set to merge later this spring.
According to the survey two thirds of business leaders in the West Midlands believe the Budget – namely the fall in corporate tax to 20% in 2015 – will make the UK a more competitive destination for international business investment and say the measures introduced by the Chancellor will help ease pressure on businesses.
But when asked if the Budget will have a positive impact on their own business, a half of the companies surveyed in the West Midlands said it won’t. Leaders in the East Midlands are more optimistic, with 60% expecting it to benefit their business.
When consulted before the Chancellor’s speech businesses called for a reduction in employers National Insurance contributions (NIC) yet, despite the new £2000 Employer Allowance on NIC being introduced to reduce the burden of the ‘jobs tax’, 75% of companies in the region say they will not consider taking on new staff as a direct result. A sentiment echoed across businesses in the East Midlands, North West and Yorkshire.
Richard Rose, Partner and Head of Tax at BDO in the Midlands, said: “Business owners were hoping for an across the board reduction in NIC, which would have benefited businesses of all sizes. The Chancellor’s introduction of a £2000 credit will mainly benefit micro businesses that employ only a handful of people.”
Nationally it is predicted that the 23% of business leaders taking advantage of the new credit could create up to 240,000 new jobs .
Business leaders are also calling out for more clarity over the Government’s position on tax avoidance and tax evasion, with just 2% saying they are confident in defining what the Chancellor and HMRC consider to be unacceptable tax avoidance.
BDO’s Richard Rose, adds: “The confusion held by business leaders is unsurprising. The Government needs to define what constitutes tax avoidance in relation to unacceptable tax planning. The General Anti-Abuse Rule (GAAR) will go some way towards addressing this but the term tax avoidance is still used far too loosely by the Chancellor and HMRC. This cannot continue. Businesses need clarity, and quickly.”
