The appointment of a new Prime Minister naturally raises questions about what lies ahead for the economy, taxation and the wider business environment.
In the last decade, the UK has seen a lot of leaders come and go, so many businesses will be keen to learn more about what Andy Burnham and his new cabinet plan to do to address key issues.
While it is still early days and many policies remain subject to further detail, there are several areas that business owners, investors and taxpayers may wish to keep an eye on over the coming months.
Economic stability will remain key
Given the events of recent years, the Government is committed to supporting economic growth, while fulfilling a long-term goal of maintaining confidence in the UK’s public finances.
For businesses, this means keeping a close eye on future fiscal announcements, interest rates, inflation and borrowing costs, all of which can have a direct impact on investment decisions and cash flow.
So far, the new cabinet and Chancellor, John Healey, have remained fairly tight-lipped on policy specifics, but they have confirmed a removal of VAT from domestic energy bills and confirmed new licences for the exploration of oil and gas in the North Sea, so there is every indication that they intend to move fast to address the cost of living crisis in the UK.
Businesses that regularly review their financial forecasts and maintain strong cash reserves are often best placed to deal with uncertain economic conditions.
Potential tax changes on the horizon
Although no significant business tax changes have been announced yet, commentators expect taxation to remain a key area of focus for the new administration, as Burnham and his cabinet seek to find solutions to reduce the impact of rising prices.
Reports suggest that future reforms could look at how wealth, property and assets are taxed, rather than increasing headline rates of Income Tax, VAT or National Insurance.
For business owners, landlords and higher net worth individuals, this highlights the importance of proactive tax planning and keeping existing structures under review.
Areas to watch may include:
- Capital taxes
- Succession and estate planning considerations
- Property-related taxes, which could replace SDLT and council tax, with an ongoing land value tax
- Reviews of the personal tax thresholds to put more money back in the pockets of basic rate taxpayers
- Investment incentives for businesses, including place-based public-private regional investment funds
- Business rates reform, specifically a suggested “warehouse tax” to reduce the impact of large ecommerce businesses
At this stage, these remain areas of discussion rather than confirmed policy.
Regional investment and growth
One theme frequently associated with the new Prime Minister is a focus on regional growth and devolution.
Greater investment in local economies, infrastructure and skills development could create opportunities for businesses across Buckinghamshire, the Thames Valley and beyond.
For growing businesses, this may lead to future funding opportunities, investment programmes or initiatives designed to encourage growth outside London.
However, Burnham’s Government has confirmed that devolution will stop short of providing regional administrations with tax-setting powers.
What should business owners do now?
While policy details continue to emerge, there is little benefit in making major decisions based on speculation alone.
Parliament is approaching its summer break and so big policy changes, with real impact, aren’t expected until September.
In the meantime, businesses should focus on the fundamentals:
- Review cash flow forecasts and funding requirements
- Ensure business structures remain tax efficient
- Consider upcoming investment plans
- Review succession and exit strategies
- Maximise available tax reliefs and allowances
- Keep informed ahead of future Budget announcements
Businesses that prepare early and remain agile are often in a much stronger position to adapt when legislative changes are eventually confirmed.
A change in political leadership does not usually require immediate action, but it is an important reminder to keep financial plans under review.
The most significant developments for businesses and taxpayers are likely to emerge from future Budgets, Finance Bills, and economic policy announcements rather than from the initial change in leadership itself.
Focusing on long-term financial planning rather than reacting to short-term headlines will be important.
We will continue to monitor developments and share updates as more information becomes available.
Need advice on how future tax or business changes could affect you? Speak to your usual Seymour Taylor contact for support or contact us enquiries@stca.co.uk 01494 552100.