ICAS calls on government for urgent action on net zero and more resources for HMRC, following Spring Budget
ICAS is calling for urgent action from the government on net zero and more resources for HMRC, following today’s Spring Budget.
On the key announcements, J Bruce Cartwright CA, ICAS CEO said: “It's good news that the current economic dip isn’t as severe as many expected, but we still need a strong economy to support public sector aspirations. Business is pushing for growth, so we welcome the measures from government to help this. It does look at first glance as though the Chancellor has been in Father Christmas mode, as much as he can ever be. Freezing fuel duty, lowering the cost of a pint in a pub and maintaining the current energy price cap will all help struggling households.
“Although we can see that the Chancellor is trying to be generous in some areas, such as more help with the costs of childcare and keeping the energy cap at current levels for three months, there is a real lack of vision in terms of net zero. The Chancellor said lots on energy security and nuclear power but missed the opportunity to do more on net zero and produce any kind of road map for the future. We know that this is a huge priority for our members, and for businesses across the UK. How much longer can we afford to wait?
“ICAS believes that we need a strong economy to build robust and efficient public services. The Chancellor should have used this Budget to properly invest in HMRC services and resources, given the Public Accounts Committee recently claimed that £42 billion in taxes hasn’t been collected at a time when HMRC staff numbers have been cut by 24 per cent in the past five years.”
On Corporation Tax, he said:
“Businesses will welcome certainty and clarity that the Corporation Tax rates established in the March 2021 Budget (but briefly reversed in the September 2022 Mini Budget) will still apply, which should help them to plan cash flows at a time of economic uncertainty. And the new policy announced today of full capital expensing for the next three years, with the intention to make it permanent, means that each pound invested in qualifying expenditure can be deducted in full and immediately from profits - worth £9bn to the economy.
“The way the Corporation Tax increase is structured means that companies who can afford to invest millions in new plant and equipment will get full tax relief in year one. Before today's announcements, they would have only got £1million Annual Investment Allowance, but this new First Year Allowance pretty much does away with that for all companies with higher levels of spend. So the big guys who can afford it, don’t pay the new rate. However, there is a clawback of allowances when the asset is then sold."
On pension contributions, he said:
"On pensions, given we know that people are still not saving enough for their retirement but are also living longer, it’s good to see the Government joining up its thinking to address wider social policy issues by abolishing the lifetime allowance and raising the annual pensions tax free allowance.”
On childcare policy changes, he said:
“Childcare costs in the UK are among the highest in the world, with some families spending more than £10,000 per year on childcare. It's no wonder that the rising cost of childcare puts people off either returning to work or increasing their hours. Making it easier for parents to return to work can only increase the availability of the workforce. However, we need to be realistic about how big an impact this will really make. It will also be interesting to see whether Scotland expands its own childcare policies.”