Nightmare for Rachel Reeves as 1 in 8 business chiefs set to leave UK over tax burden

Rachel Reeves is set to be dealt a devastating blow ahead of the Budget as damning new data shows that one in eight business chiefs are set to leave the UK over tax burden. 12% of small and medium-sized enterprise leaders (SMEs) - equivalent to around 680,000 businesses out of the UK's 5.67 million - are actively planning to relocate themselves, their businesses, or both due to the current tax burden, according to a new poll by Rathbones.

Among those planning to relocate, a third (33%) said they will also move their business abroad, with another third looking to move as individuals, while the rest plan only to move their businesses. Ireland was rated as the top destination by 26% of this group, ahead of 21% choosing Dubai and 18% selecting the US.

Rathbones commissioned independent research agency Viewsbank to interview 1,024 SME founders, owners and senior executives last month. Nearly two out of three (63%) SME owners and bosses believe the government does not do enough to encourage business growth in the UK.

Meanwhile, more than two out of five (42%) say Government policy is unsupportive of businesses, as many entrepreneurs look to relocate out of the UK.

While concern over the Budget is not driving every business out, a further 26% company leaders say that even though they are not planning on moving overseas, they are still worried about the tax environment.

The polling comes just weeks ahead of the Chancellor's Budget, at which Ms Reeves is again rumoured to raise the burden of business, and hike up taxes.

Ade Babatunde, senior financial planning director at Rathbones, says: "SMEs are the backbone of the UK economy, and the fact that many are actively planning to leave the country - whether personally, by relocating their businesses abroad, or both - due to the current tax burden is deeply concerning for the government's ambition to get Britain growing.

"Their departure would mean the loss of valuable tax revenue and much-needed employment opportunities."

The data also revealed that 36% of respondents believe increases to Employers' National Insurance and the National Living Wage have moderately or significantly affected their businesses.

SME leaders are calling for tax breaks to encourage business growth and staff hiring, as well as support incentives for business owners to take risks.

Mr Babatunde added: "SME owners are sending a clear message: they feel let down by current government policy. With nearly two-thirds saying not enough is being done to support business creation and growth, and many citing tax changes and rising employment costs as major challenges, it's no surprise that confidence is waning.

"What SMEs want are incentives to take risks, and recognition for success. These are not just asks - they're essential ingredients for a thriving economy."