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Friday, July 19, 2024

Lancashire businesses need stability from government, says tax expert

Businesses need the government to provide a stable economic and political environment as they recover from the Covid-19 pandemic.

This was the view of Tony Medcalf, tax partner at Lancashire-based chartered accountants and business advisers MHA Moore and Smalley, as he previewed the upcoming autumn budget on October 27 and the likelihood of changes in government policies affecting business.

Tony suggested businesses could be cautiously optimistic that many of the significant business tax rises which could be used by government this year had already been announced, including the 1.25 per cent increase to National Insurance from April 2022.

He added it was important for businesses that government moved away from the emergency announcements and significant policy changes which have been a focal point of the chancellor’s budgets over the past 18 months, to allow businesses to better plan and invest.

“We have got to get back to what I would call a normal budget. March’s budget as well as last year’s budgets were used to announce short-term emergency measures. It’s important for businesses that we get back to normal economic cycles so business understand the challenges and opportunities ahead of them.”

Tony said there was unlikely to be any further direct Covid-19 related support for businesses announced on October 27.

“I’m hoping there is not going to be significant changes to headline rates of tax as government looks to repay the debts accrued through its support measures during Covid-19,” he added.

“We have already had the announcement about the 1.25 per cent National Insurance increase to fund the government’s health and social care plan from 6 April 2022 as well as an increase in corporation tax from 19 per cent to 25 per cent from 1 April 2023.

“We may see a return to the types of measures usually announced in a budget such as those surrounding Enterprise Zones or further clarity on Freeports.”

However, Tony raised the question of whether government could make changes to inheritance tax which have been rumoured in recent years.

He said: “There is a white paper which the Office of Tax Simplification published in July 2019 with proposals of how inheritance tax could be reviewed. We may see announcements about changes to inheritance tax which could affect the personal wealth of business owners and managers.”

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