Business groups look for ‘fairer’ Budget

Although there is still over a month to go until the Autumn Budget the UK’s business groups have begun their lobbying the Chancellor for the changes they want to see announced. Off-payroll working rules, HMRC’s service levels, labour shortages, net zero and business rates are amongst the areas where the groups would like to see action. Here we take a look at what they want to see from Rachel Reeves on 30 October.

Significant disruption

Off-payroll working rules should be made 'fairer and more effective in the Budget', says the Association of Independent Professionals and the Self-Employed’s (IPSE) Budget Submission.

IPSE says that the rules, commonly known as IR35, are still causing significant disruption for businesses and public bodies needing to recruit freelancers and contractors for their operations.

An IPSE survey of 1300 contractors in early 2024 found that 54% had walked away from an offer of work due to disagreements over the client's IR35 determination.

It says the last government presided over a disastrous tightening of IR35 with the off-payroll working reforms. It is asking the new government to find a 'fairer and more effective way for people to work as freelancers without being subject to endless challenges from their clients and the taxman'.

Taxpayer support

IPSE also called on the Chancellor to reverse ‘the declining standard of service offered to the self-employed when dealing with HMRC’. This should include confirmation that she will not go back on her predecessor’s decision to stop HMRC making temporary phone line closures and restrictions a permanent fixture.

IPSE agrees with HMRC that a great many queries can be solved with the help of its existing digital services. The group says that such is the complexity of our tax system – and the severity of penalties for misinterpreting it – that the self-employed need the assurance and support that comes from a conversation with an adviser.

Key changes

The Institute of Directors (IoD) has also outlined its key policy changes for the upcoming Autumn Budget.

The business group has set out key recommendations for the government in five key areas:

• Fiscal rules that protect investment spending.
• A business tax roadmap that supports business confidence and planning.
• Improving the UK's labour market to address skill and labour shortages.
• Improve the UK's trade performance.
• Support SMEs in the transition to net zero.

Enhance the labour market

In order to address skills and labour shortages the IoD makes a number of recommendations. These include transitioning Skills England to an independent body with a clear remit to advise on current and expected future skills shortages in England.

The group also wants to see a strengthening of the statutory code on dismissal and re-engagement to ensure that the practice is only used in circumstances where an organisation faces a serious and credible risk to its viability.

And it says that employers should remain able to use zero hours contracts where they cannot guarantee a minimum number of hours of work due to fluctuating demand.

Urgent need

According to the IoD, there is an urgent need for the UK to have a stable, credible, long-term strategy for enabling the transition to net zero.

It says the government should launch a 'Help to Green' campaign, as proposed by the Independent Review of Net Zero. This should include information resources and vouchers for SMEs to plan and invest in the net zero transition.

Billion-pound tax bombshell

Hospitality and leisure businesses are facing a billion-pound tax bombshell in April unless the government acts in the Budget.

UKHospitality said its member will see their bills quadrupling to a combined £928 million if business rates relief ends as planned on 31 March.

The trade body is calling for the Chancellor to introduce a new lower, permanent and universal rate for hospitality's business rates at the Budget on 30 October.

It says the current business rates system unfairly penalises hospitality, with the sector paying three times more than it should do. UKHospitality wants to see a lower, permanent and universal rate, or 'multiplier', for hospitality businesses.

The Autumn Budget

The Chancellor will deliver the Autumn Budget to Parliament on 30 October. 

Whatever changes are made Mercia’s tax experts will be watching and will provide detailed analysis of the day’s announcements. Keep your clients up to date with our range of digital and printed products.