United Kingdom

Details

  • Service: Tax, Budget 2014
  • Type: Press release
  • Date: 17/03/2014

Budget 2014: UK middle market wants more government investment 

  • One in five businesses want an increase in the threshold for the 40% personal tax rate
  • Mid-market also hopes for increased investment in “hard infrastructure” such as roads and railways

 

Mid-sized businesses in the UK want to see announcements which will increase government investment and also put more money in people’s pockets when the Chancellor delivers his budget on Wednesday, according to a new poll.

 

KPMG surveyed board level executives at 161 medium sized businesses on their thoughts ahead of the Budget this week.

 

The respondents were asked which single measure would help them with their own organisations’ growth plans. “Putting more money in employee’s pockets” was the most popular response with more than one in five of respondents.  Looking at tax measures specifically, reducing the National Insurance Contribution (NIC) rate was the most popular measure that businesses wanted to hear announced this week, followed by an increase in the threshold for the 40% personal tax rate.  These measures were closely followed by a desire to see increased tax relief for investment in machinery, premises and technology.

 

Commenting on the findings, David Bywater, tax partner for KPMG’s Middle Market Practice said: “Although businesses are regaining their confidence as the economy grows, our research shows that they would like further encouragement to invest in plant and machinery to support future growth. Business is also acutely aware that if people feel that they have more money in their pockets, this will help to keep economic growth on track.

 

For many businesses outside London, there is also a need for an increase in investment of the physical infrastructure which allows the UK’s middle market to get on and do business.  Long-term under investment of public and private money in hard infrastructure, such as roads and railways, is now proving to be a barrier to growth that needs to be addressed if our regional business communities are to fully play their part in economic growth.

 

“Like the Chancellor, employers in mid sized enterprises currently have very little room for manoeuvre and can’t afford to award large pay rises.  For many there is a feeling that there is little benefit in awarding pay rises if 40% of it is eaten up in tax. Additionally a shift in the threshold of the lower 20% personal income tax bracket could help employees, putting more of their wages into their pockets which in turn could boost the economy.”>

 

However, with the election now around 12 months away, a third of businesses felt that the government has very little room for giveaways in the Budget if they want to keep the economy growing.

 

The areas that businesses do not want to see mentioned in the Budget this week were any increase in the VAT rate, a return of the 50% tax rate or any increase in the rate of corporation tax.

 

David Bywater concluded: “The UK currently has a tax regime that is highly attractive and very competitive on a global level so it is unlikely that the Chancellor will make any announcements around the rate of corporation tax, or VAT, which could be damaging to the economy as a whole and have a knock on effect to our mid-market businesses.“

 

161 executives were polled between 10th-14th March 2014.

 

Table of Results

 

 

Which SINGLE investment/incentive measure would you like to see announced in the Chancellor's Budget which will make a difference to your business?
Increased investment in hard infrastrcuture (road and rail etc) 31%
Announcement for an accelerated house building programme in the UK 17%
Further investment and increased training grants to help improve skills in the UK 17%
More incentives to 'Help to Buy' / 'Funding for Lending' schemes 3%
Measures to cap / cool the housing market 12%
Measures to help reduce energy prices 11%
Measure to help working families and the increasing cost of childcare 9%
 

 

Which SINGLE tax measure would you like to see announced in the Chancellor's Budget which will make a difference to your business?

 

Business Rate Reduction 18%
Reduction in the rate of small company corporation tax rate  10%
Zero rating of supplies for companies that export 5%
Increase the threshold of the basic taax rate 10%
Increase the threshold for the 40% tax rate 21%
Reduction in the National Insurance Contribution rate 29%
Reduction in fuel duty 7%

 

Which SINGLE measure would you like to see announced in the Budget which would help with your organisation's growth plans?

Business rates abolished for small businesses

4%

Action on reducing red tape for businesses

17%

More help for businesses looking to overseas markets

21%

Measures to help put more money in employee's pockets 

22%

Investment / Training grants to help get more young people in to work 

6%

Introduction of tax relief for infrastructure costs 

11%

More tax relief for businesses investing in machinery / premises / technology 

19%

 

Which or the following is the SINGLE announcement taht you do NOT want to see in the Budget?

Return of the 50% tax rate  23%
Increase in business rates  6%
Removal of the annual investment allowance  4%
Increase in fuel duty 2%
Increase in any of the Corporate Tax Rates  16%
Increase in VAT  25%
Removal of Entrepreneur's Relief  4%
Reduction in the Pension Cap  5%
Increase un Employers National Insurance Contribution rate  15%

 

Please choose ONE of the following to best describe your feelings on the forthcoming Budget

The Government has very little room for giveaways if they want to keep the economy growing 29%
If we are to continue at the current growth rate, it is imperative that the Chancellor focuses on increasing investment  37%
The Chancellor has, and is focussing on the right issues which will restore long term stability to the economy  13%
We need to be focussing on everyhing possible to promote international trade to and from the UK  14%
The Budget will have little or no impact on me or my business  7%

 

ENDS

 

Media Contact

 

Emma Murray

PR Manager, KPMG
020 7694 6506 / 07920 870 623
emma.murray@kpmg.co.uk

 

Notes to Editors

 

The survey was conducted from 10th – 13th March at KPMG offices in Edinburgh, Milton Keynes, Watford, London, Gatwick and Midlands.  A total of 161 C-level executives from medium sized businesses took part in the straw poll.

 

About KPMG

 

KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with over 10,000 partners and staff. The UK firm recorded a turnover of £1.8 billion in the year ended September 2012. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in more than 156 countries and have more than 152,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. KPMG International provides no client services.

 

 

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Emma Murray

Emma Murray

PR Manager - SMEs, Tech City and the London Region

KPMG in the UK

020 7694 6506 / 07956 629361

Email Emma