A recent survey conducted by Azets, a leading UK accountancy and advisory firm, sheds light on how UK tax policies are impacting business growth and innovation. The findings, just ahead of the upcoming Spring Budget 2024, reveal that the tax regime’s effectiveness in promoting key areas like business growth, innovation, sustainability, and talent attraction falls below the neutral mark of 5 on a scale of 1 to 10.

The research suggests that while the current tax environment isn’t severely hindering businesses, it’s not significantly aiding them either. Smaller businesses feel more constrained compared to larger enterprises. Interestingly, there’s a notable difference in perception between lower and upper mid-market businesses, with the latter being more positive about the tax regime, particularly regarding business growth.

Praveen Gupta, UK Head of Tax at Azets, highlights the necessity for a progressive tax system that fosters growth and investment in crucial areas like innovation and sustainability. He stresses the importance of simplifying incentives, taxes, and regulations to create a more competitive landscape that rewards entrepreneurship and ambition. Gupta specifically mentions the chaos surrounding R&D tax credits and calls for addressing the correlation between tax, regulation, and economic growth.

The Azets Barometer, which offers insights into the business climate, shows optimism among UK businesses but also reveals concerns about economic and geopolitical uncertainties, talent recruitment, and regulatory compliance. Despite moderate optimism among some respondents, the overall sentiment remains cautious, positioning UK businesses as the least optimistic in the survey.