ONE of the region’s leading accountants has issued a plea to Kwasi Kwarteng as he prepares to deliver a mini-budget tomorrow.
The newly installed Chancellor of the Exchequer is expected to announce several measures to help the country as it faces crippling levels of inflation and a cost of living crisis.
Paul Hornby, whose company JF Hornby & Co deals with the tax affairs of hundreds of businesses and individuals, says Mr Kwarteng has an opportunity to make an immediate impact on people’s lives in his new role.
He added: “We’re teetering on the brink of a year, maybe more, of abject financial pain, which will be felt in households and businesses up and down the country.
“Of course, soaring inflation is not a new thing – massive spikes in the mid-late 70s, in the 80s and even as recent as the very early 90s when it almost touched 10 per cent are all within living memory for many people.
“The difference now is that we are heading into a probable recession after two years of economic pain driven by the Covid-19 pandemic. Many businesses and families had only just picked themselves up off the floor and are now being sucker punched from every angle.
“The Chancellor must be decisive in his actions and keep those individuals and sectors most at risk at the forefront of his mind.
Paul has revealed an action plan that he believes would help steady the economy and deliver help where it is needed most.
He is calling on Mr Kwarteng to:
- Reverse the increase in National Insurance for employers and on dividends for self-employed people within limited companies to reduce pressures on cash flow.
- Reverse the planned increase in Corporation Tax for businesses; it is set to rise from 19% to 25% next year. This will allow businesses to invest, thrive and be less likely to rationalise cost bases.
- Review the boundaries for basic rate tax payers and increase it, thus freeing up cash in households across the UK.
Paul said: “I have no issue with taxes, but the regime must be fair and it must be simplified.
“Additional pressure on businesses through higher National Insurance and Corporation Tax rates may be a bridge too far in this incredibly challenging economic climate. I’d like the Chancellor to review both areas as part of his mini-budget.
“In terms of personal taxes, the bands need to be reviewed, with soaring energy costs, rampant inflation and the cost of the most basic of items on a seemingly never-ending upwards trajectory.
“I’m also calling for a review of the higher income tax child benefit charge because it’s simply not fair that in one household, two parents can earn £45k each and benefit from a full allowance despite their £90k shared income, while in another, you may have a situation where there is a stay at home parent and another who singularly earns £55,000 and they don’t benefit at all because of the imbalance in the rules.
“I go back to simplicity and fairness in our tax regime. They should be the cornerstones of every policy – and there is no better time than now, with a new prime minister and cabinet in place – to ensure that starts to happen.”