Businesses in the East Midlands believe the Budget was broadly positive for the economy as a whole but are less certain it will have a positive impact on 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 more than 70% of businesses in the East Midlands believe the Budget will help ease pressures on businesses, and 63% expect it to make the UK a more competitive destination for international business investment – namely due to announced fall in corporate tax to 20% in 2015.
But confidence falls away when asked if the Budget will have a positive impact on their own business, with 60% of East Midlands’ companies saying it won’t.
When consulted before the Chancellor’s speech, businesses called for a reduction to employers National Insurance contributions (NIC) yet, despite the new £2000 Employers Allowance on NIC being introduced to reduce the burden of the ‘jobs tax’, three quarters of the region’s companies say they will not consider taking on new staff as a direct result. A sentiment echoed across businesses in the West 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 .
The survey found that companies across the region believe Stamp Duty Land Tax and Inheritance Tax are in most need of pressing reform. Business leaders are also calling out for more clarity over the Government’s position on tax avoidance and tax evasion, with two thirds in the East Midlands saying they are not 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 unacceptable tax planning. The 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.”
