Instead of the autumn budget, which is usually delivered this time of year, Rishi Sunak has delivered his spending review to parliament. As we are in a time of unprecedented upheaval, the measures announced only cover the next 12 months. While the headlines will be taken up with the public sector pay freeze and the cut on overseas aid budget, the impact of the announcement on British businesses looks to be minimal.
The national living wage rise of 2.2% to £8.91 an hour will impact companies with a high number of low skilled workers, although the increase will not take effect until April next year. There was though positive news for parts of the construction sector that will stand to benefit from the £4bn “levelling up” fund announced, which will pay for local infrastructure improvements across the UK.
“The economic emergency has only just begun” Rishi Sunak
The gloomy statistics from the Office for Budget and Responsibility, which were littered throughout the announcement, did however set the mood for what is to come. It is widely acknowledged that increases in tax will be necessary if the record level of government borrowing (expected to hit £394bn by the end of the year) is going to be tackled. However, we won’t know which taxes will be impacted and from when until the next budget, set to be delivered in March 2021.
Don’t delay taking advice – we are here to help
Business owners making strategic decisions are used to considering taxation implications in the context of their commercial goals. In times like these where taxes are expected to increase, anyone who has plans in their personal or business matters that they know will bring about a tax charge, may want to consider acting sooner rather than later. This will help to create some certainty of the tax cost involved and avoid any nasty surprises along the line.
Businesses that may be impacted should consider investing the time and effort in forecasting how this will alter their profitability. This will provide the information needed to consider whether any changes should be made in anticipation of new factors.
Mercer & Hole is well positioned to offer support throughout this period of uncertainty. Don’t hesitate to contact us should you need advice on any of these matters. Sound strategic financial planning will help you and your company weather the road ahead.