The Organisation for Economic Co-operation and Development has revealed that British workers and businesses now face a higher tax burden than their German counterparts.
Taxes on income, profits, and capital gains reached 13.3% of the economy in 2022, the highest level since records began in 1990, as the UK’s overall tax burden climbed to 35.3% of GDP.
Concerns regarding the UK financial system have surged to their highest level since 2019, according to the Bank of England’s (BoE) latest systemic risk survey.
Not surprisingly, the BCC (British Chambers of Commerce) reports that 48% of the 5152 companies it has recently surveyed say optimism has slipped with 48% identifying concern about taxation among the main reasons for the almost 10% rise in pessimism since its last survey.
With half a million small businesses having folded since the start of 2020 it is no surprise that the FSB (Federation of Small Businesses) is warning the Chancellor against “damaging anti-enterprise tax rises” in the upcoming Budget.
The FSB is also worried about potential increases in capital gains tax.
It has asked the Chancellor to maintain the current relief allowing a 10% rate on gains up to £1m, saying that without this and other incentives “there is little reward to the risk” taken by small business owners.
While it was obvious that UK finances were in dire straits when the new government came into power, and there would need to be action over the short, medium and longer term to fix things, it is clear that any optimism at the change of regime is wavering.
Perhaps things will become clearer when the budget is finally delivered but in the meantime businesses are advised to take a cautious approach to their finances and make sure they have records for every penny received and spent.
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