Richard Stanley, partner in our Nottingham office, today welcomed moves for the government to consult with businesses over future tax plans - but believes Rishi Sunak’s Spring Statement is ‘patching over’ previous measures.
He said: “Overall, we’ve seen a willingness to listen to businesses and put a plan in place that they can announce in the autumn. While a future consultation is positive, at the moment today’s announcement is patching over previously announced tax rises with tax cuts that just equalise those increases we’ve already seen.”
Ian Dickinson, tax director in our Nottingham office, said: “While we look forward to the revised autumn tax measures, they will come into force in Spring 2023. The key issue is time - people in business need hope and certainty now.
“Things aren’t happening soon enough - people are struggling now with costs and overheads. It’s going to be a long 12 months ahead. This is because essentially British people and businesses are arguably no better off right now - when we consider the increase in fuel costs and inflation. Prices are outstripping income and the changes announced that will take place immediately will have little or no effect on the average person.”
The Chancellor’s measures to tackle the issues included raising the National Insurance threshold to £12,570 a year in July, a 5p per litre cut to fuel duty to come into force at 6pm today, changing the basic rate of income tax from 20% to 19% by the end of Parliament in 2024 and scrapping VAT on energy efficiency measures.
He also announced an increase in Employment Allowance to £5,000, claiming it as a tax cut worth up to £1,000 for half a million small businesses. The new amount will come into place in two weeks’ time.
Richard comments: “Nothing in this budget is ground-breaking – so, is it delivering for British businesses? It is helping them, but it is not going to change business. The Employment Allowance increase would not make a real dent to the average firm. Likewise, the fuel duty will only save an average of £2.50 based on filling up the average 50 litre tank. It is a help, but it is not enough. Tax savings on energy efficiency measures also won’t help the average person who cannot afford a £20,000 heat pump system in the first place.
A lot of the real difference that could be felt will depend on which of the tax rates on business investment Rishi Sunak is thinking of cutting. This is in addition to whether he’s going to extend the super deduction, or if he is going to keep the annual investment allowance at £1m. These are the bits we don’t know, but that businesses need to know.”
Richard added: “Essentially, local businesses need certainty – at UHY this is what we support our clients to do by planning for the future. They want certainty in tax rates and reliefs as well as reward for investment in their business and the wider economy.
“They also want certainty on energy prices because that's one of the biggest overheads they face as well as the tax relief for capital investment. We want something that's going to last for at least two, three or four years so that businesses can plan effectively.”
Ian said: “Hopefully businesses will get some certainty – whether or not that will go far enough, we will have to wait and see.”
The next step
To find out more about how the key announcements may affect you, please get in touch with your local UHY adviser for more information.
