More than half of SMEs struggling to pay tax bills, research finds

More than half of small and medium-sized enterprises (SMEs) are struggling to pay tax bills, with Corporation Tax emerging as the biggest challenge, according to research from Premium Credit.

The study found 52% of SMEs are currently finding it difficult to meet tax liabilities.

Around 22% said they struggle to pay Corporation Tax, 12% reported difficulties paying VAT, and a further 20% said they struggle to pay both.

The research suggested businesses are responding to tax pressures by seeking to increase revenue rather than immediately cutting costs.

Around a third (32%) said they were taking on more work to meet tax bills, while 23% planned to raise funds from existing investors and 21% intended to borrow money.

However, 13% said they may have to make redundancies.

Premium Credit said businesses were continuing to feel the effects of higher employer National Insurance contributions and increases to the National Living Wage.

Only one in five (20%) SMEs said recent tax changes had not affected them, while 36% reported reduced profits and 34% said they had cut recruitment as a result of higher costs.