UK Autumn Budget 2024: What Accounting Firms Can Expect

The Autumn Budget 2024 is already sparking discussions across many sectors, with major predictions being made for businesses and individuals about tax policy changes.

Accounting firms, particularly those advising clients on navigating tax complexities, will need to be well-prepared to adjust to these changes and guide clients through the evolving tax landscape.

Here’s a breakdown of key points from the budget that could influence accounting firms directly.

Continued Pressure on Tax Compliance and Audits

The government is keen to narrow the tax gap—estimated losses from unpaid taxes—by investing in HMRC staffing and digital tools. This “boots on the ground” approach will likely mean a rise in audits and stricter scrutiny, especially for high-net-worth individuals and complex corporate tax cases.

For accounting firms, this could mean a growing demand for advisory services focused on tax compliance, particularly for clients in sectors where tax is often complex or where business structures involve cross-border activities.

With new technology investments aimed at supporting compliance and digital audits, accounting firms may also need to upgrade their own systems or offer tech-driven advisory services.

E-invoicing and digitalisation initiatives could mean new software integrations or digital reporting requirements that accounting firms will need to monitor for clients.

Potential Impact of Freezing Personal Tax Thresholds

The decision to maintain frozen personal tax thresholds until at least 2028 suggests that more individuals will move into higher tax bands over time—a phenomenon known as fiscal drag.

For accounting firms, this creates an opportunity to provide personal tax planning services, as clients increasingly look to minimise the impact of rising taxes on their disposable income.

In addition, as fiscal drag pushes more taxpayers into higher bands, firms could see increased demand for inheritance and wealth management planning services.

Business Tax Roadmap Offers Certainty but Few Immediate Changes

The Business Tax Roadmap promised in the Labour manifesto aims to provide businesses with clearer guidance on future tax policies. However, major changes to corporate tax rates appear unlikely in the near term, as Labour has committed to a 25% corporation tax cap and hinted at keeping full expensing options available.

While this provides a stable outlook, accounting firms advising businesses will likely need to adapt strategies to align with a somewhat predictable, albeit unchanging, tax environment.

Full expensing options mean clients could continue benefiting from deductions on capital investments. This stability allows accounting firms to support clients in maximizing deductions and claiming allowances within current structures, rather than anticipating dramatic changes in tax rates.

Anticipated Reforms to Business Rates and the Apprenticeship Levy

The Labour government has signaled its intent to reform business rates in England, responding to long-standing concerns over an outdated system that disadvantages certain industries. However, meaningful changes will likely take time to implement.

For accounting firms, any shift in business rates, even if gradual, could bring advisory opportunities in tax planning, particularly for clients in the retail, hospitality, and property sectors.

The Labour manifesto also pledged to replace the apprenticeship levy with a more flexible Growth and Skills Levy, allowing businesses more control over how training funds are allocated.

This could be an essential development for accounting firms working with clients who heavily invest in training. Advising clients on how best to leverage the new levy structure could provide added value, especially if the changes address previous issues with inflexible funding use.

How to Prepare: Action Steps for Accounting Firms

• Stay Updated on Compliance and Tech Requirements: Increased focus on digitalisation and e-invoicing will likely demand compliance upgrades. Accounting firms should invest in staff training or new software solutions to manage these evolving requirements efficiently.
• Boost Advisory Services: Fiscal drag, anticipated business rate reforms, and additional tax changes mean more clients may seek tax-saving strategies and personalised financial advice. Positioning services around personal tax planning, wealth management, and corporate tax strategy could address this rising need.
• Communicate Early with Clients: With many of these changes impacting long-term planning, keeping clients informed and proactively updating them on tax strategies can help ensure they’re prepared for future shifts.
• Monitor Policy Developments: Although some reforms might take time, staying aware of potential changes to the apprenticeship levy and business rates will enable accounting firms to offer forward-looking advice to clients, especially those considering investments in training or property.

The Autumn Budget 2024 is a pivotal one, with plenty of signals for change that accounting firms can leverage to provide proactive, value-added advice. Whether through updated compliance tools, strategic tax planning, or informed guidance on policy shifts, this budget presents accounting firms with multiple opportunities to expand their role as trusted advisors in a complex tax landscape.

Need help with the compliance and paperwork so you and your team can focus on advising clients? Connect with our experts today to hire skilled accountants and tax preparers in three easy steps – call us at +44 208 146 0808 or email us at [email protected].