Business groups and think tanks have urged the Government to resist raising corporate taxes and have called for them to implement a more pro-enterprise agenda in order to enable recovery and future growth among businesses across the UK.
There is a growing concern among business owners that rises in corporation tax and capital gains tax will make their way into the Chancellor's March budget, which could hinder the nation’s economic recovery post-Covid before it has even started. As a result, there has been a call to extend business support such as grants and loans, with Jonathan Gerbert, Director-general of the Institute of Directors warning that a cliff-edge in support could be a disaster for UK business.
Private capital has proven to be fundamental in helping UK businesses weather the storm, and recover post-pandemic. Investment into UK SMEs, and the extension of EIS and loan support schemes, would be far more efficient than any Government loan scheme and vital to the resurgence of the UK economy, with the SME community making up 99.9% of private sector businesses.
Luke Davis, CEO of IW Capital:
"The huge amount of money spent during the pandemic has become a problem for this government, one that needs addressing, but we cannot afford to look at public finances with a short-term view. Creating an eco-system for businesses to thrive, grow and hire more workers is a sure fire way to increase tax receipts in the long run and while immediate tax increases give an immediate result, it is often lower taxes that see long-term success.
“For example, when the EIS income tax relief was extended from 20% to 30% in 2011, the amount invested in small companies through the scheme saw a tremendous jump. This is the kind of change that should be considered. Encouraging private investors to take a risk on a company with the potential to grow and aid economic recovery.
“The SME economy is one of the most important and exciting assets the UK has. SMEs make up 99% of businesses in the private sector and employ over 16 million people. As well as this it was an area creating jobs rapidly before lockdown measures came into effect, returning to this will be what helps us recover."