Income tax reduction top priority for businesses in Spring Budget

Businesses have backed income tax reduction as their top priority for the Spring Budget, according to Moore Stephens.

The top ten firm said that 22% of businesses considered the reduction in income tax the main priority, with reductions in inheritance tax and business rates following closely behind on 19% and 18% respectively.

With cuts to corporation tax being the first priority for only 3% of businesses, reducing income tax, inheritance tax and business rates were believed by businesses to deliver the most tangible benefits for the UK economy, the firm said.

Reductions in income tax would boost consumer spending, while high rates of income and inheritance tax “reduce the incentives for employees and entrepreneurs to work harder and create more wealth, and ultimately more jobs”.

Funding for these tax cuts should come from improvement in public sector productivity and not from government services cuts or increasing public sector debt, according to 76% of businesses included in the survey.

When asked which type of tax could “most reasonably be increased whilst causing the least amount of damage to the long-term performance of the UK economy”, 23% of respondents chose stamp duty on share transactions, with 18% opting for capital gains tax.

Timothy Fussell, partner at Moore Stephens said: “Businesses are looking for tax changes that will give the UK economy a shot in the arm.

“Reductions in income tax will incentivise workers and support consumer confidence.

“Businesses, meanwhile, don’t want to be penalised for being successful and high earning and believe that the government should be doing all it can to encourage entrepreneurial activity.

“Businesses also feel that rises in tax taken through stamp duty land tax, inheritance tax and from the forthcoming changes to business rates have gone too far and need to be reversed.”