SMEs will struggle further under Labour's tax policy, a report commissioned by the Tories will warn.

The report to be published next month by the European School of Management will show a fall in the number of small businesses, fewer reaching a £1m turnover and fewer business with a turnover of £7m+ five years after setup, over the past ten years.

Professor Davide Sola, the report's author and dean of the school, told the Independent on Sunday that the tax system for small businesses the UK had become less competitive and changes to CGT would 'further undermine' its attractiveness.

'The implications for investment and job creation could be very damaging,' he said.

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