Whither the growth? Driving up business costs, discouraging employment, and cost increases that will likely fall on consumers… Vipul Sheth sees hard work ahead for accountants.
The Autumn Budget was tough on businesses, their owners, and ultimately the general public – with knock-on effects for accounting practices.
Where to start? Well, let’s start with the cost of employing people. Employers’ NI hikes would be tough in isolation, but there are two other issues that compound the ‘true cost’ of employment.
Firstly, while talk of the NI hike has focused on it being most impactful on larger businesses, it should be forgotten that the threshold at which employers will start paying the tax will; fall to £5,000 from £9,100. This will drag thousands of cafes and small retailers into the regime.
The ‘true cost’ of employees
I said ‘true cost’ earlier because there has already been a huge non-Budget change that is on the horizon: The Employment Rights Bill 2024. The bill aims to offer protection from unfair dismissal from day one, the removal of zero hours contracts and restrictions on ‘fire and rehire’ strategies. While not all of these new proposals in the bill are ‘bad’, taken in context of the tax hikes – and let’s not forget the minimum wage increases - then it makes recruiting staff a less attractive prospect.
In a world where we are desperate to improve our economic prospects, this is hardly a positive set of moves.
While some of these changes will directly impact accounting practices, it shouldn’t be forgotten that clients are directly affected, and this means practitioners must be prepared to help them manage costs and efficiencies.
And, as we know, increased costs of doing business get passed onto the end clientele – namely the general public.
I won’t labour the point (if you pardon the pun), but resourcing is the most critical of issues for businesses and accountancy practices. Gauging the right skillsets needed in these organisations – and gaining access to them, hasn’t exactly been boosted in the last week.
Packing up and moving on
Finally, if you find me in foreign climes during upcoming Zoom and Teams calls then it might be because I’m distancing myself from the UK’s tax regime and getting ready to sell up. And I won’t blame others for doing the same. (I have no current plans!)
Entrepreneurs work hard and take risks to drive their business, and therefore the economy, forward. They often want to hand a legacy on, for those that are family-oriented. Changes to Business Property Relief and Agricultural Relief are a slap in the face to those looking to hand something on to the next generation.
Hard-earned pensions will be now caught within IHT, while BADR and CGT rates will also climb. Perhaps a (non-alcoholic) Pina Colada looms…
If you’d like to talk to us about supporting your accounting practice’s resourcing strategy, get in touch.
Vipul Sheth is founder and MD of Advancetrack
