Phil Hall of BDO: Chancellor’s Autumn Statement left questions for business
The chancellor put business at the centre of his Autumn Statement and did his best to reassure firms facing uncertain times, but a lack of detail casts shadows over an otherwise pro-business statement.
The £2bn annual fund to support R&D investment will take time to trickle through and benefit businesses.
Companies love R&D reliefs; they are genuine triggers that boost investment in innovation and technology. However, the £2bn figure is misleading. R&D reliefs are a form of EU state aid rules and it would be difficult – if not impossible – to see how the government can action this pre-Brexit without it being detrimental to the UK’s negotiations with the EU.
The chancellor finally however, addressed the complexity of UK tax code but much more needs to be done to help businesses succeed.
The move to an Autumn budget from 2018 won’t have an immediate impact but it is a step in the right direction and will make it easier to plan for the long-term, could improve the quality of legislation and result in less frequent changes.
He also touched on the alignment of employees’ and employers’ national insurance thresholds – but Mr Hammond could have taken it much further to align income tax and national insurance rules. More than half the businesses we recently polled had this as their top simplification measure to reduce the administrative burden.
Businesses will be disappointed that more wasn’t done to progress tax simplification. UK tax legislation is almost 20,000 pages long. The sheer volume and complexity of tax law is a major obstacle to business growth. Mr Hammond also spent a lot of time talking about infrastructure and productivity. Boosting productivity and bridging the gap with G7 nations will benefit businesses and workers in the long term. However, the productivity puzzle is a tough nut to crack and the government must realise that it’s not just about innovation and; it’s about getting more by doing less.
Making things simpler, helping businesses navigate the system and eradicating out-dated laws that make tax more taxing can only help growth and prosperity in the long term.