Whilst much of what the chancellor had to say has been welcomed by many SMEs the increase in corporation tax to 25 per cent on businesses making over £200,000 of profits from 2023 has been seen as the chancellor punishing success.
Tommy McNally, Tax Expert and founder of Tommys Tax described the budget as “very bad”. He said: “Today’s budget is punishing successful businesses with the rise in corporation tax to 25%. This is a massive increase and much more than I was expecting. These are the companies that haven’t received any help from the government so far and I believe it will only encourage more big businesses to go offshore. Many big businesses were already on the verge of looking to move internationally because of Brexit and this will just push them over the edge.
“Where I believe they missed a trick was on a transaction tax on the digital powerhouses like Facebook, Google and Amazon. They avoid paying taxes in the UK because they make no profit at all here and they’ll continue to avoid paying taxes after today, while other big businesses suffer. I believe that on the point of sale these digital companies should pay corporation tax. In this form of transaction tax, they’re charged per item as at the moment we’re not going to capture any money from those big companies avoiding tax which is what we really need right now.
“The main positive takeaway from the budget that will help out the small businesses that I work with, particularly in my Self Employed Business Support Group on Facebook, is the continuation of the Self-Employment Income Support Scheme. This is really good news and business owners will breath a sigh of relief while many of those who were excluded up until now will be acknowledged at long last.
“I believe that the extension on stamp duty is also a huge benefit as this will boost the economy and support the construction industry as more people will be willing to invest in their homes.
“Overall, for the average person in the UK, who could be on furlough or running their own business, this was a good budget. But for the big businesses this was very bad news which will have wider, long-term repercussions for us all in the future.”
Richard Alvin, group Managing Director of Capital Business Media agrees: “This budget could well lead to a mass exodus of successful UK businesses leaving these shores for more advantageous locations tax wise to base themselves in. The net result will be substantially less revenue for the Treasury overall. This could have a disastrous affect on places like the Northern Powerhouse really attracting, and more importantly, retaining fast growth successful companies.