Boost UK business investment by delivering a more competitive tax system

UK business tax rates must be more internationally competitive if the UK is to generate the investment needed to realise sustained economic growth. A competitive tax regime is about more than just a headline rate – there also needs to be stability, predictability and administrative simplicity. Competitive taxes will unlock more capital for our industry to invest in innovative businesses and infrastructure. 

The new Prime Minister should:

  • Finalise the review into the future tax treatment of financial services. The reviews of VAT treatment for financial services and the funds regime (especially the VAT treatment of fund management) should lead to more competitive tax regimes that incentivise investment funds, such as the innovative new UK Long-term Asset Fund, to domicile in the UK and stimulate fresh UK investment.
  • Reform the bank levy in line with the UK’s withdrawal from the EU. The EU levy is expected to reach its target level of funding in 2023, and then be reduced to a level required only to maintain the level of the fund. The UK should at the very least follow suit to avoid a situation where banks are incentivised to invest in EU countries ahead of the UK.
  • Strongly advocate for a better deal for UK-based financial and related professional services in discussions with OECD counterparts and when implementing OECD developments in the UK.
  • Reform the tax system to create incentives which will accelerate financing the transition to net zero.
  • Reform funding mechanisms on a “polluter pays” basis. At present, the Financial Services Compensation Scheme places a significant and rising cost of doing business in the UK financial services that does not exist in other jurisdictions. Reform would avoid well-run firms being forced to meet the cost of failures or misconduct by other companies.

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