Budget – sharing member insight

ICAEW members’ knowledge and experience were at the heart of the institute’s submission to the Chancellor of the Exchequer before the Budget. They shaped our policy recommendations, including taking action to simplify VAT.

The Chancellor delivered the Budget on 26 November, announcing a raft of small tax changes, rather than any big tax increases. ICAEW welcomed the move not to extend NIC to LLPs (see below) or impose new business taxes, but warned there was little to incentivise businesses to grow.

“While the costs of this Budget will be borne by more people paying more tax, in a recent poll our members told us that unless this Budget signalled a clear change of course from the government, it will not be able to deliver the conditions for growth the UK needs,” said ICAEW Chief Executive, Alan Vallance. “This is a necessity for UK plc – we continue to urge the government to realise its growth ambition and support British businesses.”

Alongside commenting publicly, the reactions of ICAEW members and experts were shared directly with ministers, opposition, select committee members, and other parliamentary stakeholders.

This work will continue into December, when ICAEW’s Public Affairs arranging post-Budget meetings with key stakeholders, and commence engagement across the political spectrum on the Finance Bill.

Tax increases on LLPs

Alongside the institute’s broader communications on the Budget, Vallance specifically wrote to Rachel Reeves on reports that Treasury could apply a charge equivalent to employer national insurance contributions to members of limited liability partnerships (LLPs).

In the letter, Vallance expressed concerns that rather than raising sustainable revenue, the proposal risked reducing the tax base and slowing growth in a successful sector. He also suggested such a move could undermine the stability and competitiveness that businesses needs to invest with confidence.

ICAEW also shared this letter with wider parliamentary stakeholders, including Treasury and Business and Trade ministers, opposition, select committees and ICAEW members. In addition, a briefing was sent to Baroness Neville-Rolfe, and other interested House of Lords peers, ahead of her question on this topic.

The Chancellor appears to have listened to the concerns raised with no announcement on this in the Budget. “This is a sensible outcome that recognises the vital role LLPs play in supporting growth, innovation, and employment across the economy,” said Vallance.

“Introducing NICs for LLP members would have risked shrinking, not growing, the UK’s tax base - discouraging investment, undermining the competitiveness of professional and entrepreneurial partnerships, and adding unnecessary complexity to the tax system.

“It is positive that the government has listened to the concerns raised by ICAEW and the wider business community, and has chosen to maintain a stable and proportionate tax environment for LLPs.”

Informing tech policy

This month also saw ICAEW engage with the government and the opposition on tech policy. ICAEW’s Head of Tech Policy, Esther Mallowah, wrote to Minister of State for AI and Online Safety, Kanishka Narayan, highlighting ICAEW’s expertise in AI assurance. The letter was sent ahead of the minster’s designation of a consortium of stakeholders that will be tasked with AI assurance professionalisation.

Mallowah also went to parliament to meet with Shadow Secretary of State for Science, Innovation and Technology, Julia Lopez. She discussed ICAEW members’ perspectives on topics including AI regulatory challenges, blockchain, the EU AI Act and the Cyber Security and Resilience Bill.

Real-world impact of Employment Rights Bill

November also saw the House of Lords consider Commons amendments to the Employment Rights Bill, and ICAEW’s views on the legislation were again cited.

ICAEW member Lord Vaux of Harrowden expressed concern that granting unfair dismissal protection from day one would have a chilling effect on hiring and harm employment prospects for certain groups. He noted that ICAEW is among several professional and business organisations that share this view.

This latest reference follows previous mentions of ICAEW at second reading, committee stage, report stage and third reading of this bill, as a result extensive engagement by the instate as the legislation has progressed through parliament.