Enterprise in the UK: Impact of the UK tax regime for private companies 2007

October 2007

Building on our 2006 survey findings, perceptions about the UK tax system and its role in supporting and encouraging enterprise are improving and awareness levels of tax incentives and reliefs available to private companies have increased. However, the need for simplicity remains an overriding concern that needs to be addressed and low usage of current tax incentives suggests that they are not supporting enterprise.

This survey, which has input from more than 420 private companies of all sizes looks specifically at the UK tax regime and the role it plays in encouraging enterprise.

Here are the highlights:

• Compared to last year, two thirds more respondents believe that the current UK tax regime is supportive and encourages enterprise (35% from 21%) and nearly twice as many of the companies that define themselves in the start-up and growth phase of their development believe the UK tax system is supportive in moving their business to its next stage (18% to 33%).
• Positive strides have been taken with regards increasing awareness of UK tax incentives and reliefs. However, uptake remains at fairly low levels, with only a marginal increase in usage levels reported over the last 12 months.
• The level of taxation – i.e. being set at too high a rate – is the most commonly given reason for perceiving the UK tax system as unsupportive. The two most frequently mentioned deterrents to enterprise were the complexity of the tax system and increased tax rates.
• Almost half (49%) of respondents identify simplification of the UK tax system as a way to lighten the burden of compliance. This desire is demonstrated by the agreement of 7 in 10 respondents to the suggestion of paying corporation tax calculated by reference to accounting profit.