It’s fair to say that last year’s autumn budget shook up the UK business world a fair bit.
With a gaping hole in the treasury coffers to fill, Chancellor Rachel Reeves focused her attention on ‘those with the broadest shoulders’ when addressing this burden. Unfortunately for UK business owners, she’d decided that it was them that boasted the extra-large shoulders needed to prop the rest of the country up.
A year on, and UK’s SME owners are nervously waiting to hear what’s next on the agenda. While there has been some recent economic growth, it’s not nearly as much as was needed, and the suspicion is that Reeves will be looking for more ways to plump up revenue.
Will businesses be hit again?
The government have been careful not to backtrack on their pre-election manifesto claims of not raising taxes for the average working person, and this has led to some creative ways to extract money from UK businesses instead.
With the UK business community already bruised from last year’s budget though, some are convinced that the government will renege on their promise of not raising taxes for the average working person.
Of course, what they define as an ‘average working person’ is open to debate, and they may also be able to squeeze some extra money by freezing current personal tax thresholds. These thresholds are currently in place till the 27/28 tax year, but freezing them beyond this date could potentially raise billions without the need to raise taxes.
VAT registration threshold change
This could well be something that the government looks at, given that the UK’s current £90k threshold before a business has to pay VAT is already higher than all EU member states.
The chancellor could conceivably reduce this threshold and still boast of the UK having a higher threshold than its mainland European counterparts.
On the other hand, it could be argued that because some small companies carefully avoid reaching the £90k threshold now, increasing it could actually stimulate economic growth.
VAT e-invoicing
The government’s pre-election manifesto made several mentions of simplifying tax processes and cracking down on tax evasion.
VAT e-invoices, a digital means of sending invoices with the ability to link relevant tax authorities to them, would be an obvious way to help enforce this. While VAT e-invoicing is voluntary right now in the UK, many other countries are already utilising them to good effect.
With the government said to have already held consultations into how this could be implemented in the UK, it seems a case of when, rather than if, VAT e-invoicing is made mandatory.
Business rate reforms
This has been mentioned, but it’s difficult to see how the government could put any sort of positive spin on raising business rates.
Those in the hospitality and retail sectors are already struggling with business rates, so a hike would be incredibly unpopular. Instead, there could be some scope in how they are worked out in an attempt to target larger firms rather than SMEs. How such a change would take shape is unclear, however.
The change of the tax year
Another tax quirk that the UK does differently to much of the world, is having their tax year from April to April. This can make it problematic for businesses that do a lot of work abroad.
As a result, it’s been mooted that the government may look to simplify matters by following the example of most other countries, and simply working out tax from January to December, a normal calendar year.
Worried about the forthcoming autumn budget?
If you think that any of the changes listed above could hurt your business, you need to act now. Getting ahead of the problem can allow you to put provisions in place that help you deal with any changes you encounter,
Our experienced advisers have overseen the fortification of many companies’ operations to make them more resilient to external changes. We can put plans in place that see your business thrive rather than just survive. Call us on 0808 280 6029, or email advice@forbesburton.com for a free consultation to see how we can help.
