Government changes to the corporate tax system have significantly enhanced the UK’s attractiveness as a place to do business, according to an EY survey of over 130 leading decision makers, including CFOs, heads of tax and tax directors.
With just a few days to go until the Chancellor’s final Budget before May’s election, the majority (68 per cent) of respondents indicated that they regard the UK’s tax system as more competitive than it was five years ago.
Eighty nine per cent cited current corporation tax rates as one of the principal factors.
Noam Handler, tax partner at EY in the North West, said: “The Chancellor has clearly struck the right chord among business leaders with the changes he introduced to the corporate tax regime.
“The vast majority not only seem to agree with the direction of the UK’s tax system, but also the rate.
“According to our survey, when asked specifically about the rate of corporate tax, 82 per cent of them said that the 20 per cent headline rate was about the right level.”
“However, the job is not yet done. Looking ahead, political uncertainty over the outcome following the general election in May, and a possible EU referendum, poses a threat to the UK’s potential. “
“Businesses have issued a plea for the necessary stability that will allow them to take informed decisions and press ahead with their investment plans.
They will be looking to the future manifestos for clarity over the direction, structure and objectives of the tax system, as well as how this will ensure that the UK remains open for business.”
As part of the survey, respondents told EY that reform of the Controlled Foreign Companies regime (CFC), and changes to the patent box and research & development (R&D) relief were also repeatedly listed as reasons for the improved competitiveness of the UK.
Looking ahead, “complexity” was at the top of business leaders’ worries when it comes to threats to the UK’s position in a global economy.
This was followed closely by “uncertainty” and the risks from knee-jerk reactions arising from the fair tax debate.