Tax third-biggest expense for SMEs

Cash-strapped SMEs are spending a significant proportion of expenditure on taxation, research by debt protection group Creditsafe reveals.

According to the survey, small businesses are devoting just under 16 per cent of their outgoings on tax obligations – totalling their third-biggest expense.

David Knowles, marketing director at Creditsafe, says: ‘This tax burden impacts profitability and the levels of investment that could be devoted to other aspects of the business.

‘While the announced delay in the increase in corporation tax from 21p to 22p in the pound is to be welcomed, many firms are struggling to survive as a result of restricted cash flow.’

Knowles adds that while larger companies have announced their intention to leave the UK to avoid corporation tax burdens, small businesses are being forced to take steps at the micro level to reduce costs.

Of the 502 small businesses surveyed, on average wages accounted for the biggest expense, representing almost a third (29 per cent) of outgoings.

This was followed by investment in stock and materials (17.5 per cent), with fuel costs accounting for ten per cent.

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