Businesses want tax certainty, survey finds
Businesses want tax certainty, survey finds
Businesses want a moratorium on business tax changes from the incoming government, according to a new survey from BDO.
When asked what they wanted to see from a new government, 70% of C-suite respondents to BDO’s survey said they wanted more certainty over the taxes they needed to pay – either through a complete freeze on any business tax changes (35%) or a business tax roadmap covering the next five years (also 35%).
However, when asked which business taxes they thought would be likely to increase over the next five years, the most popular answer (among 29% of respondents) was corporation tax. This is despite the Labour party committing to cap the rate of corporation tax at 25% for the duration of this Parliament.
The headline rate of corporation tax was increased to 25% from 19% in April 2023, although a small profits rate of 19% was also introduced at this time for companies with profits of £50,000 or less.
After corporation tax, survey respondents said they were most likely to expect increases in energy profits or electricity generator levies (27%) and environmental taxes (26%).
Both are borne out by the Labour party’s pledge to extend the sunset clause in the Energy Profits Levy until the end of this parliament and increase the rate of the levy by three percentage points. In addition, Labour’s manifesto reiterated the party’s support for the introduction of a UK Carbon Border Adjustment Mechanism, which is due to be introduced by 2027.
The survey also found that, despite assurances from the major parties in the lead-up to the election, almost one in five (18%) said they expected VAT to rise over the next five years. The current standard rate is 20%.
Paul Falvey, BDO tax partner said: ‘Businesses are acutely aware of the challenges facing the public finances and appear to be sceptical about the pre-election tax pledges.
“Given the repeated changes to tax rates during the previous administration, businesses desperately want a return to some kind of stability and certainty. Many will be hoping the promised business tax roadmap will help deliver some much-needed long-term visibility to help them plan for the future with confidence.”
ENDS
Accountancy and business advisory firm BDO LLP provides integrated advice and solutions to help businesses navigate a changing world.
The organisations we work with are Britain’s economic engine; entrepreneurially-spirited, high-growth businesses that fuel the economy.
We understand the ambitions and entrepreneurial mindset of those we work with and have the global reach, integrity and expertise to help people and businesses succeed.
BDO LLP
BDO LLP operates in 17 offices across the UK, employing 8,000 people offering tax, audit and assurance, and a range of advisory services. BDO LLP is the UK member firm of the BDO international network.
BDO’s global network
The BDO global network provides business advisory services in 166 countries and territories, with more than 115,000 people working out of 1,776 offices worldwide. It has revenues of US$14bn.
frank.x.shepherd@bdo.co.uk
07812 463601
When asked what they wanted to see from a new government, 70% of C-suite respondents to BDO’s survey said they wanted more certainty over the taxes they needed to pay – either through a complete freeze on any business tax changes (35%) or a business tax roadmap covering the next five years (also 35%).
However, when asked which business taxes they thought would be likely to increase over the next five years, the most popular answer (among 29% of respondents) was corporation tax. This is despite the Labour party committing to cap the rate of corporation tax at 25% for the duration of this Parliament.
The headline rate of corporation tax was increased to 25% from 19% in April 2023, although a small profits rate of 19% was also introduced at this time for companies with profits of £50,000 or less.
After corporation tax, survey respondents said they were most likely to expect increases in energy profits or electricity generator levies (27%) and environmental taxes (26%).
Both are borne out by the Labour party’s pledge to extend the sunset clause in the Energy Profits Levy until the end of this parliament and increase the rate of the levy by three percentage points. In addition, Labour’s manifesto reiterated the party’s support for the introduction of a UK Carbon Border Adjustment Mechanism, which is due to be introduced by 2027.
The survey also found that, despite assurances from the major parties in the lead-up to the election, almost one in five (18%) said they expected VAT to rise over the next five years. The current standard rate is 20%.
Paul Falvey, BDO tax partner said: ‘Businesses are acutely aware of the challenges facing the public finances and appear to be sceptical about the pre-election tax pledges.
“Given the repeated changes to tax rates during the previous administration, businesses desperately want a return to some kind of stability and certainty. Many will be hoping the promised business tax roadmap will help deliver some much-needed long-term visibility to help them plan for the future with confidence.”
ENDS
Note to editors
The findings come from a BDO survey of 500 C-suite executives in mid-market businesses (£10-300m in revenue) conducted by Censuswide in the period 18 June to 1 July 2024.Accountancy and business advisory firm BDO LLP provides integrated advice and solutions to help businesses navigate a changing world.
The organisations we work with are Britain’s economic engine; entrepreneurially-spirited, high-growth businesses that fuel the economy.
We understand the ambitions and entrepreneurial mindset of those we work with and have the global reach, integrity and expertise to help people and businesses succeed.
BDO LLP
BDO LLP operates in 17 offices across the UK, employing 8,000 people offering tax, audit and assurance, and a range of advisory services. BDO LLP is the UK member firm of the BDO international network.
BDO’s global network
The BDO global network provides business advisory services in 166 countries and territories, with more than 115,000 people working out of 1,776 offices worldwide. It has revenues of US$14bn.
Contacts
Frank Shepherdfrank.x.shepherd@bdo.co.uk
07812 463601