UHY Hacker Young report finds UK economy over-taxed

According to research by UHY Hacker Young, Top 50 firm, the UK economy is paying way over the global tax average. Britain has a tax burden of 18% above everyone else around the world.

So yes, it is fair to say that we are somewhat over-taxed as a nation.

The high effective rate of 32.9% GDP could well be meaning that our growth could be in jeopardy; the global average is 27.8% of GDP. The US is at 25.4% GDP and Ireland is at 28.3% - even Japan come in at 29.5%.

In saying this, many of our European counterparts also have high tax burdens, with most coughing up around 40% in tax.

The report by UHY Hacker Young warned that such high tax can put off investors, which has knock on effects when it comes to large corporations choosing to locate their bases outside the UK where the tax burden is lower.

UHY Hacker Young tax partner, Roy Maugham, said;

"While our tax burden compares favourably with some of our Western European neighbours, increasingly, that is not where the most intense competition is coming from. It needs to be a clear ambition to make our economy globally competitive by keeping a close eye on the overall tax take - perhaps even setting a specific target.

"That will need to be balanced by greater efforts to ensure that spending on the public sector delivers the best results for its customers.

"How much tax is too much ought to be discussed much more openly during the election campaign."

What do you think of the latest report? Are we running the risk of falling behind with the rest of the world due to our high taxes? Let us know your thoughts @OmnitasTax & join in the conversation on Facebook – with the General Election only weeks away, the debate is certainly sure to be a lively one!

Are general election worries slowing down UK business growth?

Are general election worries slowing down UK business growth?

Amidst general election and eurozone worries, it seems that UK businesses are slowing down their spending, which could be having an effect on our economic recovery. 

ICAEW lowered growth forecasts for 2015

The Institute of Chartered Accountants in England and Wales (ICAEW) has lowered its 2015 growth forecasts for the UK economy from 2.5% to 2.4%.

Compared to 2014, this is a slowdown – last year, growth achieved was 2.6%, which was the fastest rate of annual growth since 2007. It was also the strongest of all the G7 economies.

Oil company spend, eurozone and China concerns

The ICAEW downgraded its forecasts for growth in business investment this year from 7.2% to 5.2%, in part because of the fact that oil and gas companies are reducing spend due to the slump in the price of crude.

The possibility of Greece leaving the eurozone and the slowdown in China are also having an impact on UK business spending – recently, China reduced its growth target to 7%, which is its slowest expansion rate for twenty five years.

UK General election and EU

Here in the UK, our own concerns around the general election outcome in May are leaving SMEs uncertain about future government policies and also the possibility of leaving the EU after a referendum if the Conservatives win.

ICAEW chief executive, Michael Izza, said;

“The potential slowdown in GDP growth is a clear sign that UK firms are pressing the pause button on their attempts to drive economic growth. Their exposure to international risks, ranging from the eurozone crisis to China’s cooling economy, has subdued their capital spending plans for the year ahead.

“We cannot overstate the effect of the general election either. Businesses remain concerned about the potential makeup of the next government and its policy towards business. Any steer towards a potential exit from the EU is also causing anxiety. All this means consumers are key to the recovery.”

 “Low inflation is ensuring the first annual increase in employee real incomes since the financial crisis, and the average worker will have more money to spend. However, the government must ensure that growth isn’t predicated solely on a rise in household debt, otherwise we could find ourselves back where we were before the financial crisis.”

The current government has argued that to move forward, the UK economy must steer away from its reliance on consumer debt and move more towards investment, manufacturing and exports.

Do you think that the chancellor’s target back in 2012 to double UK exports to £1tn by 2020 is still within reach? Let us know your thoughts on Twitter @OmnitasTax or Facebook!