UHY Nottingham accountants react positively to mini budget measures for businesses

Added by Love Business East Midlands | 29 September 2022

Tax changes heading in the "right direction", as accountants reflect on biggest cuts since 1972

Tax experts at the Nottingham office of national accountancy firm UHY Hacker Young have reacted positively to the tax cuts and economic measures outlined by the new chancellor Kwasi Kwarteng in the ‘mini budget’.

Ian Dickinson, tax director at UHY Hacker Young, said:

“This is the biggest tax announcement I have seen in 25 years of working in tax. There are many changes being proposed, which overall I would say are heading in the right direction to better support businesses. It’s a very political statement budget where positive, decisive action appears to be being taken – the likes of which we have not seen in recent times.

“By scrapping the planned rise in corporation tax to 25 per cent, the government are effectively going back to where they started in March, which is going to increase business spending.

“We’ve been preparing our clients across the East Midlands for this rise, so the reversal comes as some relief to these businesses, at a time when they are being squeezed by rising energy costs.

“The proposed low-tax investment zones also appear to be a fantastic opportunity for businesses in the East Midlands, with Nottinghamshire, Derbyshire and Leicestershire county councils all in discussions. If these zones come to fruition, they could provide lots of infrastructure projects through increased road and rail connections.

“Individuals may get a bit extra money, with the reversal of the 1.25 per cent proposed rise in National Insurance contributions being welcomed. This, however, does little to mitigate the astronomical rising cost-of-living affecting families.

“Collectively, these decisions are a gamble, and it is difficult to accurately forecast the potential gains to these measures, which the government projects to be £45 billion. For the most part, they are relying on people to increase their spending proportionally. The government will inevitably have to issue more gilts and bonds, and it appears that global markets haven’t initially reacted positively.

“Our clients want certainty and simple rules, with many measures being put in place two years ago now abolished or reversed, and a general election in two years' time – so we hope that the government sticks to these plans.”

Richard Stanley, partner at UHY Hacker Young, said:

“This ‘mini budget’ has caught many by surprise. It seems we have a radical chancellor who is willing to take risks to get us back into business, create a positive economy and build back up again. It has effectively cancelled pay cuts in April 2023 and brought forward pay rises.

"Because of Covid and the war in Ukraine, the government was going to burden businesses and taxpayers through rising corporation, income and dividend tax. The new government has reversed all this and is effectively paying for what’s happened previously.

“We anticipate many businesses will welcome these new measures. We will be able to talk to clients more easily again about whether they should be paying dividends or salaries. While they will be breathing a sigh of relief, they acknowledge there will be further costs down the road.

“Hopefully it will also encourage more business to operate in the UK, as we do have one of the lowest tax regimes in the developed world.

“Many people, however, will see this as a budget for the rich as they have lifted the cap on bankers' bonuses and the additional rate tax cap. Is the government expecting larger corporations to pay exceptionally large bonuses, of which tax will be paid upon? I don’t think this approach is the right answer and I think is unlikely to make a huge difference.

“It’s not a budget for the person on the street but the chancellor has got himself noticed. Very few foresaw the government getting rid of the additional rate of income tax and scrapping the IR35 reforms from 2021.

“And while the stamp duty threshold rises are a positive step forward, it does follow the major step back of rising in mortgage rates, so provides only a short-term saving for prospective homebuyers.

“Whether these measures work and boost growth remains to be seen, but hopefully it will give us some stability at least until the next general election.”

For more information about UHY Hacker Young, please visit http://uhy-uk.com or call 0115 959 0900.

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