Over three quarters of small and medium sized businesses in the UK warn tax hikes for high earners will force entrepreneurs to set up shop overseas, a survey suggest.
The tax measures announced in the Budget, will act as a deterrent to entrepreneurs to set up firms in Britain, according to 75% of the 350 small and medium-sized businesses surveyed by accountancy firm, MacIntyre Hudson.
Measures unveiled in the Budget include: the withdrawal of personal allowances for those earning over £100,000, the new 50p top rate of income tax, and restriction in pension relief for those earning £150,000.
The research found, over three quarters of respondents believe the tax hikes will prove "punitive" for successful business people. Almost 75% of businesses think the UK has become less competitive than other major economies in recent years.
Nearly 90% say the UK will fall victim to a "brain drain" as top talent fees the UK for better opportunities abroad.
More than a tenth say there is a "significant chance" they will move their business to a more favourable tax climate, while almost three quarters would consider a move if it were realistic.
The research also reveals, tax changes will damage Britain's entrepreneurial activity as they reduce the incentive for entrepreneurs to work hard "beyond a certain point".
Over a third claim they personally will put less effort into going the extra mile within their own business.
One in five people involved in setting up a business in the UK say they would not have chosen to do so under the tax regime of today. Almost 70% describe the current system as less competitive than when they set up their own business venture.
"What was once a celebrated, competitive tax and regulatory regime has become increasingly burdensome, particularly for those ambitious individuals who underpin the health of our economy," says Nigel May, tax principal at MacIntyre Hudson.
He believes the Government's optimistic forecasts for recovery are based on the assumption Britain's entrepreneurs will continue to innovate, build and take the risks as they have before.
"What the Chancellor may have overlooked is that these essential activities for future growth rely on the very people his so-called ‘targeted' tax rises hit hardest."
Search for replacement to begin imminently
60+ £300bn ISA savings
Has technology moved on?
Total funds on list rise from 26 to 58
What made financial headlines over the weekend?