North West businesses believe the Budget will make the UK more attractive for international investment but are less confident it will drive economic growth or impact positively 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 almost 65% of businesses in Greater Manchester and 61% in Liverpool 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, yet more than half of businesses surveyed in the North West say it will not help drive economic growth.
When asked if the Budget will have a positive impact on their own business, more than half of Greater Manchester-based companies said it won’t. Confidence fell even further for Liverpool businesses, with more than two thirds (69%) expecting not to benefit.
When consulted before the Chancellor’s speech businesses called for a reduction in National Insurance contributions (NIC) yet, despite the new £2000 Employer Allowance on NIC being introduced to reduce the burden of the ‘jobs tax’, more than 80% of North West companies say they will not consider taking on new staff as a direct result. A sentiment echoed across businesses in Yorkshire and the Midlands.
Chris Sparkes, Tax Partner at BDO in the North West, 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 is focused on micro businesses, those that employ less than ten 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 leaders across Greater Manchester believe Inheritance Tax is in most need of pressing reform; whilst in Liverpool a change in Stamp Duty Land Tax was at the top of the list.
Business leaders across the North West are also calling out for more clarity over the Government’s position on tax avoidance and tax evasion, with two thirds in Manchester and Liverpool saying they are not confident in defining what the Chancellor and HMRC consider to be unacceptable tax avoidance.
BDO’s Chris Sparkes, adds: “The confusion held by business leaders is unsurprising. The Government needs to define what constitutes tax avoidance in relation to the introduction of the new General Anti-Abuse Rule. The terms ‘tax abuse, aggressive tax avoidance, tax avoidance and authentic tax planning’ were used almost interchangeably during the Chancellor’s speech and in Budget documents. This is not right. Businesses need clarity, and quickly.”
