Tax taking over as the biggest challenge for SMEs

More than a third of all UK small and medium-sized enterprises now believe tax will be their biggest challenge in the next three months.

According to a poll of 520 directors of UK businesses, 44% said the National Insurance Contribution (NIC) increase in the budget would negatively affect them – a figure that would likely be far larger solely among the hospitality community.

The research from accountancy network Moore UK comes after UKHospitality chief executive Kate Nicholls labelled the new NIC threshold a regressive change that will have a “significantly devastating impact” on the hospitality industry. It is estimated that hospitality will be hit with an additional £3.5b in extra tax.

The survey found that 37% of businesses cite tax as one of the biggest challenges facing them in the next three months, compared to 21% 12 months ago. Meanwhile, 29% of owner-managers said tax rises in the Budget would make it harder for their businesses to commit to capital expenditure, while 29% said the Budget would make hiring new employees harder.

Moore UK chief executive Mark Lance said: “Tax increases in the Budget went further than many business owners expected – many now worry that their businesses will suffer as a result.

“Business owners will have to decide whether they pay for the NIC increase by reduced profits, cost cutting or by putting up their prices. None of those solutions are very palatable.”

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