Amid growing concerns that the recent decision to increase capital gains tax will have a negative impact on SME owners, four out of five of the SMEs surveyed are already citing the burden of taxation as their top worry.

John Heaney, UK Speciality Commercial Underwriting Manager at Hiscox explained that:

“Obviously CGT is a hot topic for SME owners right now. The ending of taper relief and the increase in CGT is a potential hindrance to entrepreneurial endeavour."

“Our research shows an anxiety by small business owners towards taxation in general. The cost of running a business has increased, reflected in rising local business rates and the increasing compliance cost of tax regulation."

“Overall, the Risk Barometer shows that 40% of SMEs’ top concerns are issues unrelated to their core business activities.”

Last week, the UK's Federation of Small Businesses (FSB) announced that it had commissioned Ernst & Young’s Chris Sanger, the original architect of the capital gains tax (CGT) taper relief scheme, to come up with alternatives to Alistair Darling’s plans to abolish it.

On non-tax matters, the Hiscox 2007 Risk Barometer also revealed SMEs are feeling the effect of today’s challenging economic environment. Pressure to increase sales has shot from fifth to second place in the poll, while the effect of the economy on business was a worry for three quarters of the SMEs polled. Worries around cashflow have also increased and are now ranked the sixth top concern, compared with ninth place in 2006.

Linked to cashflow, clients refusing to pay also featured in the top ten concerns for the first time.

Hiscox’s 2007 Risk Barometer also found that processing paperwork, complying with UK company law, and dealing with competition were all concerns for a high proportion of the SMEs surveyed.