By Mr Bankruptcy
25th January 2024
UK firms are currently having to manage the largest tax burden for decades, in conjunction with a whole host of other economic challenges. What does that mean for the future of Britain as a “nation of shopkeepers”?
The tax burden keeps on increasing
The current corporate tax burden is at its highest rate for 50 years, with the level of increased taxation imposed by the government over this parliament the highest than for any other parliament since the 1950s, according to the Institute of Fiscal Studies.
At the last general election UK tax revenues were at 33% of the national income, but by the time we’re likely to be going through the next one (November 2024 but who knows?) taxes are expected to account for 37% of national income.
This increasing tax burden is being attributed to the Government’s move away from austerity, its intention to spend more on public services and to long term trends such as the demands made by an ageing population on the public purse, along with many other reasons.
What’s been changing for business owners?
Over the past few years, some important changes have contributed to the increased tax burden faced by businesses in particular:
How is the tax burden affecting your business?
For businesses owners, seeing more of their income and profits being consumed by taxes means that there’s less to spend elsewhere, impeding investment and subsequent economic growth. Businesses are also becoming more cautious in their spending, which impacts down the supply chain.
The current tax regime doesn’t just hit the pocket. It can also make life more difficult for smaller business owners trying to understand their tax obligations, for example the tiering of corporation tax to be paid based on the amount of profit earned; all of this adds to the bureaucracy and stress of managing a business.
The increasing tax demand is also likely to contribute significantly to the level of debt faced by business owners. HMRC has already reported an increase in the number of businesses struggling to pay their tax bills.
While bringing in expert advice from a tax specialist can give you peace of mind and help you make the most of your business income, it still consumes more time and cost, which the UK’s wealth generators can ill afford. And no matter what happens politically this year, it’s hard to see the situation changing drastically any time soon.
James Rosa Associates
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