Rachel Reeves should use the Budget next month to urgently review the UK’s tax system, including business rates and VAT, a chartered accountants group has urged.
The Chancellor has been called on to set out the government’s plans to reform business rates, VAT and employment status by the end of the year in the fiscal event next month.
Giving businesses a wider tax roadmap would help stimulate economic growth and boost investment, the Institute of Chartered Accountants in England and Wales (ICAEW) has said.
Chief executive Alan Vallance said: “The first budget of a new government is a golden opportunity to take the big decisions needed for the long-term.
“Reviewing the tax system should be a clear priority for Labour, and reforms to VAT, employment status and business rates, which are not currently conducive to economic growth, should be central to this.”
Ministers should seize this opportunity to consider wholesale reforms to a range of taxes to boost growth, the organisation argued in its submission ahead of the Autumn Budget.
Simplifying VAT, making it less expensive for firms and HMRC, and improving certainty of employment status for tax purposes, would help remove barriers to growth, they said.
The institute has also called on the government to fix its underlying debt measure to allow for an increase in the investment the UK needs for growth, as part of a long-term fiscal strategy.
“Public and private investment is needed now to build the long-term growth that is essential to the UK’s future prosperity,” Vallance added. “Using this Budget to change the debt rules will support this, but this requires co-ordinated action across government departments.
“The government must take a holistic view and ensure that industrial, trade, tax, investment and skills strategies are integrated and have aligned objectives and outcomes.”
The ICAEW has also called on the government to: offer a long-term business tax roadmap over the next decade; review capital allowances and simplify venture capital trust taxes; and review reporting burdens on employers and proposed non-dom and carried interest reforms.