In its Autumn Budget submission to HM Treasury, ICAEW has called for an urgent review of the UK’s tax system and urged the government to seize this opportunity to consider wholesale reforms to a range of taxes to boost growth.
Its proposals include reforms to VAT to make it less complex and costly for both businesses and HMRC, as well as improving certainty of employment status for tax purposes. Both measures would remove barriers to business growth, ICAEW argues.
ICAEW is in ongoing discussions with the government about reforms to a range of taxes, including business rates, which the Institute believes would be enhanced through better use of data and technology.
The Institute has also called on the government to fix its underlying debt measure to allow for an increase in the investment the UK needs for growth, as part of a long-term fiscal strategy that puts the public finances on a sustainable footing.
Alan Vallance, ICAEW Chief Executive, said:
“The first Budget of a new government is a golden opportunity to take the big decisions needed for the long-term. Reviewing the tax system should be a clear priority for Labour, and reforms to VAT, employment status and business rates, which are not currently conducive to economic growth, should be central to this.
“These are big parts of the tax base, but they don’t operate as effectively as they should and are holding back growth. Reform in many areas has been deferred for too long, but action early in this parliament to commit to reform could yield dividends for the economy further down the road.
“Our members run and advise millions of UK businesses. They have a deep understanding of what businesses need to drive growth the government is looking for. That’s why we’re asking the Chancellor to set out a tax roadmap for business, which will provide the certainty needed to build confidence and drive investment.
“Public and private investment is needed now to build the long-term growth that is essential to the UK’s future prosperity. Using this Budget to change the debt rules will support this, but this requires co-ordinated action across government departments.
“The government must take a holistic view and ensure that industrial, trade, tax, investment and skills strategies are integrated and have aligned objectives and outcomes. It is key that government investment enables private sector additionality, as part of a whole economy approach.”
As part of the business tax roadmap, ICAEW has also called on the government to:
- Provide clarity on how business taxation is expected to evolve over the next five to 10 years, including when changes are expected and the objectives for reform.
- Review capital allowances to support the government’s growth and net zero ambitions and simplify the venture capital trust tax regimes.
- Ensure claiming research and development tax relief remains cost-effective, especially for SMEs and smaller claimants.
- Review reporting burdens on employers.
- Review the impact of proposed reforms to tax rules for carried interest and non-UK domiciled individuals to assess the impact on growth and investment.
- Reduce the administrative burden and cost to business of the planned rules for Making Tax Digital Income Tax Self Assessment.
- Provide further investment in HMRC to improve customer service levels and resources to help improve compliance, particularly among small businesses.
Other recommendations within ICAEW’s submission include a plan to position the UK as the green finance capital of the world, committing to regular support schemes to upskill workers on artificial intelligence, reintroducing growth vouchers for small businesses and developing a net-zero investment tracker to assess the impact of Budget measures on the environment.
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CONTACT: ICAEW media office tom.mackintosh@icaew.com or 07866 853841