The Confederation of British Industry (CBI) has warned candidates for the Conservative leadership to develop serious, credible and bold plans for growth and that,“Tax changes must trigger business investment, not fuel inflation”.

In an open letter Tony Danker, director-general of the CBI, an employers’ organisation, said that the ‘eye-watering inflation’ suffered by people and businesses was exacerbated by a number of factors, primarily the longer-term trap of low growth. Adding that “As the leadership contest plays out, growth can’t be put on hold for two months. We cannot afford to get stuck in limbo with few decisions being taken and little action seen. Business confidence is falling.”

Most of the candidates who are fighting to become the next prime minister have pitched tax cuts as a core policy. Liz Truss and Nadhim Zahawi (that latter, who has failed to gain sufficient support to make it past the first round) both pitched with plans to reverse the proposed increase in Corporation Tax, while others propose reducing the National Insurance increase.

“Sustainable economic growth must be at the heart of your manifestos. Without it, leadership ambitions cannot be met nor those of the British people and businesses,” wrote Mr Danker. While he accepted that the hike in headline Corporation Tax was not intended to be introduced in a weakening growth environment and should be revisited, it was the combination of taxes that was hurting business.

The CBI said that growth that relies on only government or household consumption is doomed to fail, especially at a time of rising inflation and high debt. Investment targeted business tax measures avoid significant inflation risk as they seek to materialise into economic activity over the year ahead and beyond, rather than right now in the midst of inflation.

It proposed: 

  • A permanent successor to the Super-deduction.
  • Fundamental and urgent reform of the Business Rates system.
  • A globally competitive and effective tax regime including looking at:  
    • Property taxes (business rates).
    • Payroll taxes (national insurance).
    • Income taxes (Corporation Tax).
    • Specific tax surcharges that apply in different sectors.

Useful guides on this topic

Super-deduction & First Year Allowances
What is the new Super-deduction allowance? When does it apply and what is the rate of allowance? What other First Year Allowances (FYAs) are available? What is the SR Allowance? What if I dispose of an asset on which the Super-deduction or SR allowance has been claimed?

Spring Statement 2022: Income Tax & National Insurance
Chancellor Rishi Sunak made the following announcements on Income Tax and National Insurance in his Spring Statement on 23 March 2022: 

External links

CBI: An open letter to the Conservative leadership candidates


Squirrel ad


Are you enjoying our content? 

Thousands of accountants and advisers and their clients use www.rossmartin.co.uk as their primary TAX resource.

Register with us now to receive our unique FREE Tax Planning Tips and Advice Guide & our FREE OMB Newsletter.

 

 

 

Enjoying the Practical Tax content on www.rossmartin.co.uk? 

Sign up now to receive a unique FREE Tax Planning Tips and Advice Guide & our FREE Newsletter.

.Squirrel ad