Four in 10 entrepreneurs mulling UK exit
Four in 10 UK-based entrepreneurs are considering moving their firm overseas, a fresh poll has found, in further evidence the government’s crackdown on wealth and Britain’s stagnant economy are driving people away from the country.
According to audit shop S&W’s Business Owners Sentiment Survey, 39 per cent of the UK’s entrepreneurs are mulling a move abroad.
In contrast, nearly half (47 per cent) say the government’s policies are hamstringing their expansion plans.
Tax raid hits businesses
The stark findings follow months of warnings from UK plc that the £40bn tax raid announced by the Chancellor in her Autumn Budget had sapped business confidence and eaten into their bottom lines.
Major changes announced to both the rate and threshold of employers’ national insurance contributions will raise roughly £24bn off the backs of British businesses. The rise in capital gains tax from 20 to 24 per cent will generate the Exchequer an estimated £2bn a year.
Entrepreneurs were also hit by changes to inheritance tax (IHT), after the government closed a decades-old carve out – known as Business Asset Disposal Relief – that allowed business owners to pass their companies down a generation free from the levy. The change is currently slated to come into force in April next year.
Despite other favourable tax arrangements enjoyed by entrepreneurs – such as the enterprise investment scheme and entrepreneurs’ relief – remaining in place, the trio of tax hikes has had crippled start-up owners’ confidence in the UK economy, the study’s authors said.
Toby Tallon, a partner in S&W’s tax division, called the findings “extremely worrying”, adding: “Business owners are key to driving growth and they need to be given the confidence to make the long-term decisions that will create jobs.”
Over four in 10 respondents said the government’s treatment of businesses was deterring them from starting another venture, and 45 per cent warned a further hike to capital gains tax would have the same effect.
The study, which polled 500 entrepreneurs with turnovers above £5m, also found the IHT reforms would make 43 per cent consider leaving the UK if the government doesn’t change course.
Emma Queen, a tax partner at S&W, urged the Chancellor to put “business owners at the heart of her thinking” when delivering her next fiscal event in the Autumn.
“We’re having more and more conversations with businesses looking at moving operations elsewhere. Whether it’s tax driven or access to funds, they’re asking if the UK is giving them what they need,” she said.
Record levels of relocation by entrepreneurs and non-doms
The poll’s findings reflect similar warnings that the Treasury’s changes to tax policy are driving wealth creators away from the UK.
On Wednesday, Bloomberg News published an analysis of 5m company findings that revealed a stark jump in business leaders quitting Britain since the general election last summer. Over the past year, more than 4,400 directors have disclosed a move abroad to Companies House, the investigation found, with a rapid acceleration in the lead up to April, when most of the government’s tax changes came into force.
The Bloomberg analysis attributed much of the exodus on Labour’s highly contentious decision to axe the non-dom regime, a centuries-old customs status that lured foreign nationals to Britain with favourable tax terms.