Expert commentary following Chancellor’s announcements

23/11/2023
Susan Love (ACCA)

FOLLOWING this afternoon’s budget announcement, ACCA, the leading professional body for finance professionals has welcomed the Chancellor’s focus on economic growth, but questions have been raised as to whether this is enough to raise the low level of business confidence reported by their members.

Susan Love, Strategic Engagement Lead for Scotland at ACCA, has given the following commentary:

“With the Chancellor announcing a number of positive measures for small firms, all eyes will now turn to the Scottish Government’s spending plans to be announced next month. Small businesses in Scotland will be keen to see measures on non-domestic rates mirrored, such as rates relief for the hospitality sector. It’s now key for the Scottish Government to consider how its support, whether through infrastructure or training, can maximise opportunity for Scottish firms, by enabling them to take advantage of investment incentives.”

Prior to the Budget announcement, ACCA called for the Chancellor to commit to improving key areas that will impact growth of the economy, such as HMRC service levels, but they were notably absent. 

Expert commentary on the real impact of Pensions, Payroll & NI reforms, Capital Allowances,Digitalisation & Simplification of Tax and Business Finance  from ACCA is as follows:

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PENSIONS, PAYROLL & NATIONAL INSURANCE REFORMS

ACCA welcomes the interesting proposal requiring employers paying into an existing pension pot if they choose, however it should be executed in a way that minimises administrative burdens and complexity for business. 

Whilst the short window required for implementation will be welcomed by those in receipt of a pension, payroll providers are now under an extraordinary pressure to be able to plan and deliver changes to NI, payroll and pensions in record time. Further clarity around the expectation of delivery is required, and we will work with ACCA members to ensure implementation runs as smoothly as possible. 

It will be interesting to see what the impact on the reduction of Class 4 National Insurance will have on whether incorporation remains the most tax effective route for most small businesses. ACCA has always maintained that incorporation should be for sound business decisions rather than a tax-led one. 

The reductions in NICs obligations for the self employed help reduce the long established distortion between incorporated and unincorporated business formats for the smallest businesses 

CAPITAL ALLOWANCES

We welcome the confirmed plans to make full expensing permanent for businesses – this will encourage business investment by companies and lead to increased growth.  

This provides certainty and stability for business, something we have called for increasingly over the past 12 months. Encouraging investment in businesses and incentivising it through improved capital allowance expensing is a step in the right direction to promoting longer term and stable economic growth that the UK needs.  

How this will trickle down to SME businesses who already have AIA and will navigate both reliefs is something we will observe over the coming months. 

DIGITALISATION & SIMPLIFICATION OF TAX

The Government announcement that the threshold for Making Tax digital (MTD) remains at £30,000 will disappoint some who wanted the figure higher, but at least there is relief it is not lower. 

Our members have expressed concern about how tax simplification is progressing since the abolition of the Office for Tax Simplification (OTS), and about HMRC service levels. 

Simplicity, certainty, and stability as the cornerstones of a good tax system. A simpler tax system avoids the potential for mistakes and enquiries, which too often distracts HMRC from addressing serious and deliberate evasion, as well as being better suited to digitisation. 

BUSINESS FINANCE

With confidence amongst SMEs low, the Chancellor needed to announce a series of measures to boost investment. Today’s statement includes a number of positive steps, including simplifying and reducing tax for self-employed individuals, maintaining rates relief for hospitality and freezing the small business multiplier, as well as action on late payment and continuation of business investment incentives. 

While we need to ensure that certain measures, such as proposed pension reform and increased data requirements from HMRC don’t add additional administrative burdens on employers, overall these measures will all be warmly welcomed by small firms across the country.

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