Higher capital gains tax would discourage business creation, say six in ten business owners
Six in ten (60%) UK business owners say they would be deterred from starting a new business if Capital Gains Tax (CGT) is increased in the Autumn Budget, according to new research commissioned by professional services group S&W.
The survey of 500 business owners at companies with annual turnovers ranging from £500m or more down to £5m also highlights concerns about the UK’s competitiveness, with more than half (54%) surveyed saying they would consider moving their business abroad if taxes increase further.
In addition, 50% of business owners surveyed would consider leaving the UK if CGT was raised in the Budget and 51% would consider leaving the UK if a wealth tax was introduced.
When asked which potential Budget measures concern them most, business owners surveyed ranked further increases to employer National Insurance Contributions (41%) and CGT (41%) as their joint biggest worries, ahead of a wealth tax (28%), reductions in pension reliefs (25%) and further changes to inheritance tax (24%).
Toby Tallon, tax partner at S&W, commented: “Business owners are sending a clear warning to the chancellor: further tax rises risk undermining confidence, discouraging investment and prompting more entrepreneurs to look overseas.
“While the government has limited options when it comes to raising additional revenue to fulfil its spending commitments, Capital Gains Tax and the possible introduction of a wealth tax are areas business owners will be watching particularly closely.
“If the UK wants growth, it must remain an attractive place to start, scale and sell a business. As the Budget approaches, business owners will be looking for measures that back ambition, encourage investment and strengthen the UK’s reputation as a competitive place to do business.”
Emma Queen, tax partner at S&W added: “Entrepreneurs play a vital role in driving innovation and job creation across the UK, so it should be a real concern for the government that six in 10 business owners say they would be deterred from starting a new business by a rise in Capital Gains Tax, while 50% say they would consider leaving the UK as a result.
“Business owners need the confidence to make long-term decisions about investment and hiring. As the chancellor prepares for his Autumn Budget, there is an opportunity to reinforce that confidence with measures that support entrepreneurship, encourage ambitious founders to build and grow their businesses in the UK, and ensure the country remains an attractive home for entrepreneurial talent.”