The UK scored an average of below 5 (on an optimism scale ranging from zero to 10) with business growth scoring just 4.7, clearly indicating SMEs views that the current tax regime is stifling vital drivers of economic development.

There is a significant disparity between lower and upper mid-market businesses with those turning over £10m - £49.9m averaging around 5.0, whilst those with a £50m - 99.9m turnover are slightly more positive with an average score of 6.0.

Mark Pryce, head of business tax with Azets in Scotland said that Scottish SMEs are desperate for a business environment where people are incentivised to build business wealth. This needs a more progressive and equitable tax system for all that supports critical business areas such as growth, innovation, recruitment and retention.

He said: “A simplified regime of taxes, regulation and incentives would make a major contribution to entrepreneurship, ambition and investment.

“R&D tax credits, for example, are a key driver of innovation, but the UK scheme is in chaos. And Scotland has now compounded the already too onerous tax muddle with its new six income tax bands.

“The fiscal drag effect means more tax than ever, yet there is an obvious correlation between tax and economic growth, and this ought to be a priority for both governments.”

The Azets Barometer survey regularly measures the opinions of leading businesses on economic outlook, financial performance and emerging threats and opportunities with an optimism scale ranging from 0 to 10. When measured on economic outlook for the next 12 months the UK scored just 5.1 out of 10. Compared to the Nordics and Ireland, UK businesses were the least optimistic in the survey.