Ahead of the Autumn Budget, financial services firms will be hoping that the Chancellor prioritises measures to address the climate of uncertainty affecting workers in the sector and take the pressure off household budgets. These measures could help to shore up productivity at a time of wider economic uncertainty.
Productivity in the services sector has slumped recently and with a number of financial services firms indicating their intention to move out of the UK in the event of a no-deal Brexit, the Chancellor may feel the time is right to take the pressure off workers and their household budgets.
Martin Atkins, partner and business services sector specialist at accountancy firm, Menzies LLP, said:
“With incentives for large corporates firmly off the agenda, the Chancellor may feel his hands are tied when it comes to tackling some of the issues affecting the performance of businesses in the sector. However, by avoiding tax increases in some areas and introducing a package of tweaks to current fiscal policy in others, he could help to address worker uncertainty by alleviating pressure on household budgets and improving stability at a critical time.
“Among the measures that should remain the same, the Chancellor should avoid changes that could impact the cost of living by maintaining the freeze on fuel duty and protecting the tax-free childcare scheme.
“Measures to address the housing shortfall would be especially welcome, particularly if it meant increasing the supply of more affordable properties by introducing a lower capital gains tax rate payable on the sale of buy-to-let properties, although this would require careful treatment to avoid a rise in house prices. More tax breaks for first-time buyers and planning measures to encourage development activity would also make a difference.
“Further investments in ultra-fast internet access for all would make it easier for companies to extend flexible working opportunities to workers and simplifying or even extending the Enterprise Investment Scheme (EIS) to encourage wider take up, could also have a positive impact on workers.
“One of the country’s most valuable resources is the pool of talent that lives and works here in the UK. Encouraging and nurturing this, will give businesses one more reason to locate here.”
Another major concern, for businesses and workers in the sector, is uncertainty surrounding the use of off-payroll workers. If the Chancellor announces plans to extend IR35 to the private sector, businesses that want to continue to use workers in this way because of the flexible resource they provide would have to make sure their working arrangements are fully consistent with the fact that they are self-employed. For the workers affected, there is also a risk that a change of their IR35 status could trigger HMRC enquiries into their previous arrangements.
Martin Atkins said: “This could add to the current climate of uncertainty affecting workers in the sector and further undermine productivity.”
