TAX INCENTIVES for investment in infrastructure are “key” to driving growth among Britain’s biggest businesses, according to the latest annual tax competitiveness survey by KPMG.
The Big Four firm polled senior tax professionals in 57 of the UK’s largest businesses, with findings suggesting such reliefs could free up tens of thousands of jobs and stimulate capital expenditure.
Organisations which suggested tax reliefs for infrastructure or capital investment reported they would increase their headcounts by an average of 6%, in turn upping their capital expenditure by 12% and their research and development by 17%.
Of FTSE 100 companies interviewed, a third said they would increase their headcount by 7% on average – equating to 4,000 jobs – if the government introduced tax reliefs on infrastructure investment.
Global head of infrastructure tax at KPMG Margaret Stephens described investment in infrastructure as “a national imperative for the UK”.
She added: “[The] government must do all it can to support it. However, the current tax system actually deters capital investment, for example, in new power stations, waste plants, roads and rail and other capital projects. The UK is the only G20 country which does not give tax relief for this expenditure.”
Chancellor George Osborne is due to make his Autumn Statement on 5 December, with KPMG’s head of tax policy Chris Morgan suggesting “a move in this direction” may be considered.
“Such a move would have a real and lasting impact on jobs and capital investment in the country,” he said.
The ATT had previously expressed concern that the legislation was overly complex and created unnecessary complications within the practical working of the new allowances
Introduced in 2013 to encourage R&D investment, the scheme allows UK businesses to pay only 10% corporation tax on profits derived from any UK or certain EU patents
Yet, KPMG’s annual survey shows that the UK is still an attractive place to do business, despite falling in rankings in tax competitiveness and FDI appeal
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