Five changes the new government should implement

It follows an intense month of campaigning, televised debates and party manifestos.

We have heard promises and arguments for the introduction of numerous policies and tax changes from all parties, including the addition of VAT to private school fees, cuts to national insurance, changes to capital gains tax and the increase of income tax thresholds. 

With so many new ideas being thrown around, it inspired our firm to stop and have a think about what we would like to see from the next UK government – whoever it may be.

Here are the five changes we agreed on and the areas I would prioritise if I were tasked with being the chancellor for a day.

Simplify the UK tax system

One of our tax partners at HW Fisher, Stevie Heafford, puts it perfectly: “The next government should take a fresh look at the tax system and refocus it on two key principles: common definitions, where everyone understands what the rules are, and common sense, for when they should apply.”

I agree entirely. For too long – and last month was a prime example of it – we have seen tax being used as a political tool.

We have seen too many changes introduced as a knee-jerk reaction and without proper thought for the consequences.

All legislation needs to be more carefully thought out and all impacts considered before it is passed.

Simplifying the tax system would benefit everyone, and agreeing on one set of rules and sticking to them would give the country the stability it has been wanting for a long time. 

Fix the UK’s rental market

According to a report by the estate agents Hamptons, there were 40 per cent fewer rental homes on the market in 2023 compared with 2019. This will not come as a surprise to many advisers.

Higher interest rates, alongside tax and regulatory changes, have forced many landlords to either sell up or increase their prices. Meanwhile, the increase in rental costs is leaving many first-time buyers with less cash at the end of each month to save for their own property. 

It’s a catch-22, and the government needs to intervene to break the cycle by reviewing how the tax system can help the market operate more efficiently.

This could involve the removal or reworking of the restriction on mortgage interest tax relief for landlords, or the introduction of new measures to make it easier for first-time buyers to get on the ladder.

Invest in HMRC to provide a faster service for all

I believe I speak on behalf of all accountants when I say there is nothing more frustrating than trying to get in touch with HM Revenue & Customs.

Call-waiting times are at an all-time high, responses take forever and getting hold of the person you need is borderline impossible. 

This is causing serious delays at all stages of interaction. Tax enquiries are taking too long to solve and repayments are slow to process.

It is good that the government decided to scrap the idea of closing HMRC’s helplines for half a year – but if they are staying open, things need to improve.

If I were the chancellor, I would review the current staffing levels for HMRC and see what investments could be made to end this needless cycle of delays. 

Champion SMEs and entrepreneurs

Small and medium-sized businesses are the lifeblood of the UK economy.

In 2023 there were 5.5mn of them, representing more than 99 per cent of the business population.

However, some of these businesses will not be around for much longer unless they get the help and attention they both need and deserve. Last month, more than 2,000 company insolvencies were registered in England and Wales. 

If I was the chancellor I would introduce fresh measures to support SMEs, starting with addressing their cash flow challenges.

This could involve setting up a new payment initiative for large companies and government agencies that will guarantee faster payments for SMEs.

I would also try to tackle the issue around debanking. A report by the Treasury committee reveals how small businesses are being mistreated by banks. In the past year alone, more than 140,000 have been debanked. 

We are also seeing loan approval rates fall drastically, and more business owners are being forced to use their personal assets as collateral. 

Instead of turning their backs on businesses in their time of need, we must see more government-backed schemes that ensure fair access to low-interest loans for SMEs. Otherwise, the incentive for entrepreneurs to start their own business will quickly disappear.

Opening a bank account also needs to be faster, especially if the government is serious about attracting new inward investors into the UK.

It is shocking that an overseas business can incorporate a UK subsidiary company, register it for tax, VAT and payroll within a short time, but they cannot open a bank account for months and months.

To entice more overseas investment to create new jobs and wealth, this is an issue that needs to be fixed sooner rather than later.

Streamline trade with the EU

It has been four years since the UK left the EU, and both businesses and consumers are still paying the price. In fact, two thirds of respondents to a British Chambers of Commerce survey say trading with the EU is now more difficult than it was a year ago.

It is a trend that we are very much seeing with our own clients.

Getting goods through the hard border that now exists between the UK and the EU – as well as the reporting that is required – has become a significant barrier to growth for many exporters, particularly those selling goods to consumers.

Added to that complexity is the recent imposition of border controls that have significantly increased the cost of importing goods from the EU for certain sectors.

I expect many businesses, particularly smaller ones, would love for the UK to rejoin the customs union and/or the single market.

At the very least, the government needs to improve the implementation of the EU-UK Trade and Cooperation Agreement to allow for greater trade facilitation. 

Looking ahead

Whoever wins the forthcoming election, it is fair to say the chancellor will have a big job ahead. There is a lot that needs to be done and many competing priorities to balance.

As accountants and trusted advisers to individuals and businesses, we have an incredibly important role to play when it comes to helping our clients through periods of change like this one.

We do not know yet who will be in Westminster later this week, but whatever policies they implement, it is our role to interrogate the details, understand the direction of travel and help our clients to make informed decisions that are in their best interests.

Andy Rich is the managing partner of HW Fisher