After chancellor George Osbornes Summer Budget featured introductions including the Living Wage, an apprenticeships levy and increase to Insurance Premium Tax, ICAEW and its director for business Stephen Ibbotson want less rather than more.
The chancellor should be wary of introducing additional measures which will impact on business,” Ibbotson said. Businesses I meet do not anticipate any real benefit [to the above measures]. And it is a concern that some businesses could react to the introduction of the new Living Wage by increasing prices and putting a freeze on recruitment for both permanent and temporary staff.
Research conduced by ICAEW revealed the measures expected to have the biggest negative impact on businesses are increases in Insurance Premium Tax (56 per cent), upping the Living Wage (28 per cent) and the apprenticeship levy (12 per cent).
Furthermore, companies surveyed by ICAEW do not believe the continued reduction in corporation tax which has fallen from 28 per cent to a planned 19 per cent by 2017 under prime minster David Cameron will offset the negative impacts of new measures.
By not announcing any more bombshells in the Autumn Statement, the government has a chance to give businesses the opportunity to plan with confidence for the longer term. This will allow them to focus their energies on growing both themselves and the economy,” Ibbotson added.
Read more about developments over the summer:
- George Osborne says tax dodgers have nowhere to hide
- George Osborne adds more detail to Northern Powerhouse plans
- George Osborne permanently fixes Annual Investment Allowance at 200,000
- Apprenticeship levy so firms get back more than they put in
Of those firms impacted by the Living Wage, 53 per cent plan to increase prices, 37 will reduce hiring and 31 per cent will limit temporary staff. Also, 47 per cent of these businesses said the Living Wage would bring no benefits to their business, while eight per cent believed it would reduce staff turnover and ten per cent stated it will improve productivity.
Osborne will be making his Autumn Statement address on 25 November at around noon. For a round-up of his Summer Budget announcements, visit our detailed article.