The global professional body for more than 100K finance professionals – whose members work inside small businesses – says the cumulative cost of employment, tax compliance and local decision-making will decide whether SMEs grow.
ACCA – the Association of Chartered Certified Accountants – believes the Chancellor’s first Budget offers some relief to small businesses, but stops short of the certainty they need to plan and invest.
The Chancellor announced a 3.9% rise in the National Living Wage and National Minimum Wage, an increase in the threshold for small business rates relief for retail, hospitality and leisure from £12,000 to £18,000 and several longer-term modernisation proposals across tax areas.
UK Director of ACCA, Abdul Goffar, said: “ACCA’s message following the Budget is that the quality of the announcements matters as much as the amount raised.
“Businesses need stability to improve confidence and encourage investment. HMRC needs the capacity to collect what is owed and tax reform should simplify the system – rather than add another layer of complexity.
“ACCA awaits the more detailed plans on the announcements, especially on fiscal devolution and we welcome the long-term roadmap commitment. However, we are concerned that the measures announced impacting businesses now will not be sufficient to improve business confidence.”
Local decision-making
The Chancellor also committed to 100% of business rates being retained locally by the end of the decade, with 20% going to mayors from next year and a share of income tax from 2028.
Gemma Gathercole, Strategic Engagement Lead for ACCA said: “ACCA welcomes the fiscal devolution roadmap. Devolution brings decision-making closer to communities, but it must be accompanied by clear accountability, transparent public finances and adequate finance expertise at local level.
“Moving responsibility without building capacity risks creating more complexity, rather than reducing it. Businesses need stability and certainty to grow, so in England, the roadmap must provide certainty for business to understand the changes and especially for businesses that work across administrative borders.”
HMRC and tax compliance
Glenn Collins, Head of Technical and Strategic Engagement at ACCA welcomed the decision for HMRC to receive investment to improve compliance and stronger powers to collect overdue tax:
“Investment into HMRC is much needed, but new measures only work if HMRC has the resources, systems and a clear roadmap to deliver them, and if taxpayers and agents get clear guidance in good time. While we have seen a marginal reduction in levels of dissatisfaction with HMRC from our members, service levels are still too low, not least given the substantial changes arising from MTD.
“We need to see investment in the training and capacity of those handling routine tax enquiries, and the customer experience of the vast majority of compliant taxpayers and their advisers, including the appropriate uses of AI. Professional agents can be part of the solution – enabling them to undertake more tax tasks, would further reduce the pressure on HMRC.”
The fiscal picture
Jonathan Ashworth is ACCA’s Chief Economist: “This Budget has been the “do no harm” budget, that had generally been expected. There were small measures announced by the Chancellor to try to give households and firms some “breathing space” in the face of significant economic pressures, with small and targeted tax rises to help pay for them.
“To avoid large tax increases, which would have damaged confidence, the Chancellor tolerated some reduction in headroom against meeting his main fiscal rule. At £15bn, the remaining headroom is likely to be viewed as being broadly acceptable by government bond markets.
“Nevertheless, the road ahead on the fiscal front remains extremely challenging, amid an uncertain and unpredictable global economic backdrop, very elevated government debt levels, and with difficult decisions still needing to be made at the Spending Review in 2027.”
About ACCA
ACCA (the Association of Chartered Certified Accountants) is the global professional body for professional accountants, with members working in businesses of all sizes, including many UK small businesses.
