Chancellor must seize the moment at Budget

Chancellor Rachel Reeves must seize the moment at the Autumn Budget to boost business and grow the UK economy. Business confidence is beginning to rise as inflation falls close to its target and interest rates starting to come down. However, economic growth is currently forecast to remain flat in 2025 and 2026 with consumers still reluctant to spend in the wake of the cost-of-living crisis. The British Chambers of Commerce (BCC) and the Institute of Chartered Accountants in England and Wales (ICAEW) have both put forward the solutions they want to see from the Chancellor on 30 October.

Competitive environment

The BCC’s budget submission focuses on policy recommendations to encourage investment, strengthen the workforce and develop our local economies. 

• Create a competitive investment environment by expanding full expensing to leased assets and promoting North Sea investment. 

• Support a healthier workforce by reducing the employer and employee tax on workplace health services. 

• Engage employers in skills planning by extending investment in Local Skills Improvement Plans and addressing gaps in local training provision. 

• Reform business rates, with the aim of lowering the multiplier to 45p by the end of this Parliament. 

• Invest in infrastructure by delivering previously planned transport projects, improving rail capacity, and updating planning rules to increase employment land supply. 

Huge moment

Shevaun Haviland, Director General of the BCC, says: ‘The first Budget of a new government is always a huge moment to shape the expectations of business and the public for the years ahead.

‘So, the Chancellor is right to champion the critical importance of economic growth and investment. Businesses are keen to get more detail on how the government plans to do this, so we can all work to make it happen.’

Business tax roadmap 

Meanwhile, the ICAEW says it believes that a business tax roadmap is key to delivering greater certainty and encouraging businesses to grow.

The business tax roadmap should set out how the government might react to different scenarios, and consider how best taxation can support investment, skills and the transition to net zero, the Institute adds. 

On measures related to corporation tax, ICAEW says that consideration should be given to ensuring that tax relief is available for expenditure that is capital in nature but does not qualify for capital allowances.

The government should also ensure that research and development tax (R&D) relief remains cost-effective for small and medium-sized businesses.

Review of the tax system 

The ICAEW is also urging the government to review what it says has become an increasingly complex tax system.

It says simplification would improve HMRC service performance and processes and remove personal and business taxation cliff edges.

ICAEW believes that the tax system has developed several fault lines that distort behaviour and discourage growth.

Amongst its recommendations is that simplification must come before digitalisation.

Too often the efficiencies that might be realised by digitalisation of the tax system are undermined by the fact that the tax system is too complex, says the ICAEW. 

The Institute also says that capital taxes should support long-term business investment. If there are to be changes to inheritance tax, for example, the government should try to ensure they do not adversely impact investment in, or the development of small and medium-sized businesses.

Finally, it says that the impact of changes on HMRC’s resources must be considered. In recent years, HMRC has been asked to do far more with less, and this has contributed to HMRC services levels being at an all-time low, says the ICAEW.

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.