UK tax policies stifling growth, Azets finds

UK tax policies are restricting business growth and innovation, according to new research from Azets.

The Azets Barometer January 2024 survey reveals average scores of just below the neutral mark of five on a scale of one to 10 related to the UK tax regime’s ability to promote or inhibit key areas of business growth.

The UK scored 4.7 for business growth 4.8 for innovation 4.7, for sustainability and 4.7, and the attraction and retention of talent 4.7.

The research suggests that, while not overly harmful, the prevailing tax environment isn’t significantly aiding businesses.

The score is driven largely by smaller businesses that feel more inhibited than enterprise firms.

There is a significant disparity between the lower and upper mid-market, as businesses with a £10m-£49.9m turnover view the tax regime as broadly neutral.

Those with a £50m-99.9m turnover are the most positive, with an average score of 6.4 for business growth.

The UK’s economic outlook for the next 12 months scored 5.1 out of 10, hinting at a cautious, wait-and-see approach towards prospects.

Of the 323 UK respondents, 41% expressed moderate optimism with scores of 6 or above, contrasted with 35% who were more pessimistic, scoring 4 or lower, and 24% opting for a neutral score of 5.

Praveen Gupta, UK head of tax at Azets, said: Simplifying incentives, taxes, and regulations is essential to create a more competitive landscape that rewards entrepreneurship and ambition. R&D tax credits, for example, are a key driver of innovation, but the scheme is in chaos.

“Businesses are paying more tax than ever, yet there is an obvious correlation between tax, regulation, and economic growth, and this ought to be a priority for this Government and the next.”