The victorious party in July’s General Election should place a review of Corporation Tax rates at the heart of its fiscal policy, a leading accountant has said.
Paul Hornby wants the levy, which last year increased from 19% to 25%, to be at the centre of a rethink on how businesses are taxed.
He believes privately owned SMEs are often seen as an easy target for tax hikes because they have little choice other than to accept the increases and focus on their businesses.
Paul said: “The increase in Corporation Tax from 19% to 25% was a real terms rise of more than 30%. Where else would you see a hike of that magnitude and it not be met with uproar?
“We are just starting to see the impact work its way through as year-end accounts are prepared – and it is going to hit businesses hard.
“Coupled with the increase in dividend tax for company directors and the reduction in the tax-free dividend allowance, there isn’t a great deal to be cheerful about at the moment for business owners.”
The UK’s political parties are in the throes of a pre-election battle as leaders vie for votes ahead of the polls opening on Thursday, July 4.
Business policy has not emerged as a key battleground in either of the two main party manifestos, although both have said they will not further increase Corporation Tax.
Paul said he believed SMEs were so fundamental to the UK’s economy that a root-and-branch review of taxation, with the goal of creating a less aggressive model, should be a central pledge of all party manifestos.
“Being in business, taking the plunge, daring to dream and being prepared to take risks has to come with rewards that are worth putting everything on the line.
“There were 5.6 million small businesses (with 0 to 49 employees) at the beginning of 2023 – that’s 99.2% of the total business ecosystem.
“Those SMEs account for 99.9% of the business population, account for three-fifths of all employment and around half of turnover in the UK private sector – but they are treated with disdain.
“At the very least, I would like to see a review of Corporation Tax when we have a new government, along with a commitment to freeze or reduce dividend tax rates for company directors.
“The issue is that the present administration has already done all the dirty work, so it’s unlikely they will backpedal in the event they are re-elected – and if Labour win, the chances of them reversing the tax increases the Tories have already taken the flak for are incredibly slim.”
