Cut business costs in Budget or cut growth, accountants tell Chancellor

Accountants are calling on the Chancellor to cut business costs as employment taxes cripple firms, This Is Money can reveal.

As Rachel Reeves prepares for the Autumn Budget she is coming under fire again for hiking employer National Insurance contributions in last year’s Budget, making it more expensive for companies to hire staff.

Now the Association of Chartered Certified Accountants has joined the chorus warning of mounting pressures on business and declining economic confidence.

A survey of ACCA members found that 94 per cent lacked confidence in the economy, and almost two-thirds believed the outlook was negative.

Employment taxes, issues with HM Revenue & Customs and complicated tax rules mean the economy is ‘broken from its foundations’.

Gemma Gathercole, ACCA’s strategic engagement lead, said: ‘Enough is enough. The Chancellor must ensure the Budget focuses squarely on growth, economic steadiness and enabling business to thrive.’

Crippling costs: Accountants warn the Chancellor that businesses are struggling with higher employment taxes

‘We need to see stability restored and business trust rebuilt. How will the Government do that? We need joined-up policymaking which starts with reducing business costs and taking urgent action to fix HMRC services.’

It echoes calls from trade groups and high street firms like Tesco, which have urged Reeves not to raise taxes again next month.

Two-thirds of accountants say employment taxes are the biggest barrier to growth, while a quarter say spiralling costs are the most significant obstacle. Some 13 per cent blame the regulatory burden.

When asked what would help to boost growth, 30 per cent of ACCA members called for costs on business to be reduced.

Meanwhile, there are concerns about the effectiveness of HMRC ahead of the Budget.

The tax system is getting more complex, with more people filing tax returns due to frozen income tax thresholds and increased wages.

Accountants warn that HMRC’s poor service levels are having a direct impact on productivity, with more than half saying inefficiencies are affecting their organisation or clients.

Earlier this year, MPs found that HMRC’s customer service processes were out of date and that average call waiting times reached record levels, exceeding 23 minutes in 2023-24.

Sir Geoffrey Clifton-Brown MP, chair of the Public Accounts Committee, called the tax office a ‘lumbering dinosaur’.

Accountants say the most urgent areas for reform are reduced call waiting times (20 per cent), improved communication (18 per cent), and priority access for professional agents (11 per cent).

Gathercole added: ‘These results should be a wake up call for the Chancellor. As accountants, we are at the frontline of business and our message for the upcoming Budget is clear: cut business costs or cut growth.’

Source – Indonesia News