Tax regime 'unsupportive' say 71% of businesses

ALMOST THREE-QUARTERS of UK private businesses say the tax regime does not support enterprise, according to a new survey by PwC.

In 2007, just 59% said the same thing and respondents also warned SME-targetted measures are failing to deliver.

Higher tax relief for research and development will have no impact, according to 60% of respondents, while the extension of the small business rate relief holiday and reforms to Venture Capital Trusts received similarly lacklustre reviews.

Head of private business Ruby Parmar, said: "Private businesses hold the key to future economic growth, many having weathered the recession better than their listed counterparts.

"The Government says it recognises this, but certain measures designed to support business endeavour are not having their intended effect, or at least not being appreciated across the private business sector."

Broader tax changes were also unpopular, with 91% saying higher national insurance contributions negatively impacted their business, while three-quarters are unhappy with the VAT hike to 20%.

Despite the grumbles, optimism is on the rise, with 82% expecting the business environment to brighten in the next five years and around 70% confident their revenues and pre-tax profits will climb within 12 months.

Many are looking to Brazil, Russia, India and China to grow, as well as developing new products and increasing market share.

Parmar highlighted access to finance as crucial to success, warning banks' reluctance to lend remains a major threat to private businesses.

"The chancellor's plans for a credit-easing scheme could be a big help, but much will depend on the level of finance available, whether it will be easy to access and the cost to the borrower," she concluded.