Almost a quarter of entrepreneurs would not start another business in the UK under the current tax system, a new survey has revealed.
The survey, conducted by accountancy firm MacIntyre Hudson, found almost 90% of entrepreneurs believe the UK is at risk of a ‘brain drain’ following a spate of tax increases on small businesses and high earners in recent years.
Recent tax hikes include the 50% tax rate on those earning more than £150,000, staggered increases to the small firms’ rate of corporation tax and the abolition of capital gains tax taper relief.
Commenting on the survey, Nigel May, tax principal at MacIntyre Hudson, said the “punitive” tax system could hinder the UK's economic recovery, by driving wealth creators to more favourable climes.
He said: “The government’s optimistic forecasts for recovery are based on the assumption that Britain’s entrepreneurs will continue to innovate, build, work and take risk as they have before.
“What the chancellor may have overlooked is that these essential activities for future growth rely on the very people his so-called ‘targeted’ tax rises hit the hardest.”
According to the survey, more than one in 10 small and medium-sized companies are considering moving abroad, to countries where the tax system is more supportive of start-ups and growing businesses.
More than 70% of business leaders believe the UK system has become less competitive in recent years, in comparison to other countries, and many fear further tax increases could be on the cards as the government attempts to tackle the national debt, the survey found.
Some 69% of small firms thought further tax rises would seriously inhibit their businesses’ growth.
“What was once a celebrated, competitive tax and regulatory regime has become increasingly burdensome, particularly for those ambitious individuals who underpin the health of our economy,” added May.
© Crimson Business Ltd. 2009