Significant tax changes in Autumn Statement could be viewed ‘negatively’ by businesses

Businesses will be looking for consistency when it comes to corporate tax policies announced in the UK Chancellor’s Autumn statement.  

Any significant changes could be received “negatively”, says Andrew Burman, principal, and global practice lead of transformation at Ryan.   

September’s HMRC tax receipts revealed there was a significant increase in monthly business tax revenue, with a historic £14 billion collected in corporation tax. The government explained the rise in corporation tax was due to April’s rate increase from 19% to 25%.  

With November’s Autumn Budget drawing closer, Burman argues it is unlikely any alterations will be made to business taxation.  

“The best we can expect is some tinkering around the edges as we get closer to the next general election,” he says.  

Joe Neal, tax manager at Blick Rothenburg said HMRC’s monthly statistics continue to show an increasing burden being put on the British public.  

“The income tax take has increased by 12.5% this year compared to last year whereas average pay growth is currently at 8% for the private sector and 6.8% for the public sector,” he adds.   

Cutting inflation still the priority  

The cumulative corporation tax earnings from April to September reached £43.3 billion, marking a £7.7 billion increase year-on-year.  

Although businesses have been calling for a tax reduction, Chancellor Jeremy Hunt made it clear in September that any cuts were unlikely with him focusing primarily on cutting inflation in half.  

“Any tax reductions made now would be too little too late and could be met with some criticism from voters”, says Burman.  

 “The Chancellor has made it clear that his top priority is to bring inflation under control. With learnings from Truss’s budget last year, it’s unlikely that there will be any big surprises that have the potential to unsettle the markets again.” 

Neal stated that all eyes will be on the Chancellor to see if he relieves the tax burden on the public or if he continues to attempt to achieve the UK’s inflation goal.  

“Jeremy Hunt has already managed expectations by stating that he will not be announcing any big tax giveaways due to the concern that this could contribute to inflation,” he said.  

“However, with an election expected next year and with backbenchers calling for a tax reduction if the taxpayer is to be allowed any small reprieve, this could be announced at the Autumn Statement next month.”  

If no major changes are made, Burman suggests the statement could be employed as an opportunity to show the pathway to future tax cuts.  

“The conditions under which the cuts may be proposed and the type of tax cuts they would make—keeping in mind they are most likely to come into effect post-election,” he says.