The tax headache firms rank above the bill, says Truro’s Azets

Ask a business owner what they would change about tax and you might expect a one-word answer: less. A new survey suggests the paperwork bothers them more than the price.

Around 400 UK business leaders were questioned for the latest quarterly Azets Barometer of business sentiment, produced by accountancy and business advisory firm Azets, which has offices across the South West, including Truro.

A total of 54% said simplifying the tax system should be the government’s first priority. Fewer than half (47%) put cutting corporation tax at the top.

“Drowning in tax complexity”

HMRC estimates that compliant UK businesses incur £15.4 billion each year in meeting around 2,500 obligations across 27 policy areas.

Peter Gallanagh, UK and Ireland Chief Executive at Azets, said the results show that small and medium businesses are “drowning in tax complexity”.

Peter added: “They are not just asking for lower taxes, they are asking for a system they can understand and plan around. Simplifying that red tape would give SMEs greater confidence to invest, hire and grow.”

What business leaders want

The top five demands from those surveyed were:

• Simplifying the tax system (54%)
• Reducing corporation tax (47%)
• Reforming business rates (44%)
• Reducing employers’ National Insurance contributions from the current 15% (39%)
• Expanding capital allowance and investment incentives (38%)

The pressures behind the numbers

The research also asked business leaders what worries them most. Higher labour costs came top, cited by 43% of respondents. Skills shortages followed on 39%, then geopolitical events (37%), energy prices (37%) and reduced profit margins (35%).

Those pressures are already changing decisions. Over the past 12 months:

• 45% had passed price increases on to customers
• 42% had delayed planned capital expenditure or expansion
• 38% had restructured or renegotiated supplier contracts
• 35% had frozen new headcount or hiring
• 34% had accepted permanently lower net profit margins
• 28% had taken on additional borrowing to manage cashflow

Growth still on the agenda

Even so, 39% of business leaders said growing their business through cost-effective means was their biggest strategic priority over the next 12 to 24 months.

Peter said: “SMEs are still ambitious, but ambition only goes so far when every pound is under pressure, and little is being done by the UK government to help them.

“High costs and tight cashflow are forcing businesses to think twice about hiring and investment. If SMEs are expected to power UK growth, as they have for many years, we need to give them the headroom to do so.”

According to the latest annual business activity figures from the Office for National Statistics, there were 2.79 million VAT and/or PAYE businesses in the UK as of March 2026. Of those, 238,000 (8.5%) were in the South West.