Leading business expert delivers Budget verdict

A senior figure in business and accountancy services says hiring decisions will be impacted by the Budget.

Dominic Bourquin is Head of Tax Consultancy & Corporate Finance and Partner at Monahans, the independent accountancy and business advisory firm with bases in Swindon and across the region.

He said: “Ultimately if you change the fiscal rules by which the Government measures its financial performance and raise £40 billion in taxes it suddenly becomes easy to spread that money around. But how that tax take will actually affect the growth of the economy and how many jobs will be created – only time will tell.

“When the Conservatives trailed an increase in employers National Insurance (NI) back in 2021, the OBR said that 80 percent of that increase would result in lower wages and the other 20 percent would be passed on to consumers.

“So, with employers’ NI contribution rises, national minimum wage and national living wage increases, as well as an unknown new worker’s rights bill, it is difficult to envisage a world where hiring decisions won’t be impacted by the weighty cost of bringing even one new worker on board.

“Because of this, despite the confirmation of Labour’s manifesto promises of no NI, VAT and Income Tax rises for individuals, the impact of NIC increases for employers may be indirectly passed onto those they employ, both in terms of lower wages and fewer new recruits.

“The national minimum wage increase for younger workers may also have the unintended consequence of damaging youth employment. If businesses have the choice between an older more experienced worker and a younger junior worker, who are paid the same, it’s not rocket science to guess who they would prioritise."

Mr Bourquin added: "For businesses, a guarantee that corporation tax rates will stay the same, as well as the full expensing relief, annual investment allowance and the R&D regime is not to be sniffed at – it will provide businesses more certainty, even when recruitment becomes much more expensive.

“Any reforms on business rates will also be welcome news, but we’ve been promised change before, so watch this space to see what materialises.

“The abolition of the non-dom regime, trailed to raise £12.7bn and the rises in Capital Gains Tax rates, trailed to raise £2.5bn per annum both rely on judgments about individuals’ behaviour – will the non-doms go and live elsewhere? They are, after all, the most internationally mobile people in Britain, and of course only if you sell assets will you pay CGT, which of course you don’t necessarily have to do. 

"So, the jury’s out on the amount these measures may raise.

“After almost three decades of advising clients through budgets, I am viewing all of these announcements with some trepidation as to how these tax increases will play out. Like many before her, it seems that the Chancellor ignored the parts of the OBR report that didn’t paint her budget favourably such as the OBR’s statement that £40 billion in extra taxes will ‘affect the long-term growth of this country’ and cherry picked those which did.

“And, of course, the reliability of forecasting isn’t something to be taken as a given – after all, predictions are based on hundreds and hundreds of different assumptions about people's behaviour, international events and external events. Only time will tell.

“In the meantime, our advice to businesses is not to make any knee jerk decisions until the detail becomes clear, and to speak to a business or personal finance professional who will be able to support you in making decisions in line with your longer-term financial goals.”