Richard Otoo and Bhagirath Jain from the Tax and Accountancy Clinic based at the Royal Docks School of Business and Law at the University of East London outline key policy recommendations for the 2024 UK General Election, emphasising tax simplification, SME support, innovation funding, regulatory reforms, and green investments to drive economic growth and sustainability.
Tax Simplification and Reliefs
To stimulate GDP growth and support SMEs, the next government may prioritise tax simplification and relief measures. The recent increase in corporation tax rates from 19% to 25% for profits over £250,000 has placed a significant burden on businesses. Revisiting this policy and considering potential reliefs or incentives will be crucial for maintaining competitiveness and encouraging investment.
Furthermore, the reduction in the dividend allowance has increased the tax burden on business owners. Policies to restore or increase the dividend allowance will help mitigate these impacts, allowing businesses to thrive and reinvest in growth opportunities.
Support for SMEs
SMEs are the backbone of our economy, and their survival is vital. Addressing the issue of late payments is essential. Implementing stringent legislation to enforce prompt payment practices can unlock billions in unpaid invoices, improving cash flow and reducing financial stress for SMEs.
Energy costs remain a significant challenge for many businesses. Extending support schemes or introducing new incentives to reduce energy expenses will provide much-needed relief. Direct financial support or subsidies for energy-efficient upgrades can help businesses manage costs and contribute to environmental sustainability.
Innovation and R&D Funding
Innovation drives economic progress. Increasing R&D tax relief is essential to support cutting-edge developments across various sectors. Enhanced tax credits and broader eligibility criteria will encourage more businesses to invest in research and development, fostering a culture of innovation and positioning the UK as a global leader in technology.
Direct innovation grants, particularly for artificial intelligence and green technologies, are crucial. Increased funding for innovation centres and support for startups in high-tech fields will stimulate job creation and economic growth.
Regulatory Reforms
The financial services sector requires robust and clear regulatory frameworks. With the rise of digital assets, establishing comprehensive crypto regulation is critical. Protecting consumers while fostering innovation will ensure the UK remains at the forefront of financial technology advancements.
Strengthening corporate governance and reforming insolvency rules are also imperative. Enhanced protection for creditors and employees during corporate failures will create a more stable business environment.
Green Investment
Sustainable development is non-negotiable. Mandating or incentivizing green investments within the financial services sector will align economic activities with environmental goals. Policies that support sustainable energy projects and encourage businesses to adopt renewable energy solutions will drive the transition to a low-carbon economy.
SME Funding and Support
Accessible funding options for SMEs are essential for their growth and resilience. Introducing more grants and low-interest loans will empower small businesses to expand, innovate, and weather economic uncertainties. Strategic financial support will ensure that SMEs continue to contribute significantly to the economy.
Conclusion
The upcoming election presents a pivotal opportunity to implement transformative policies that will drive economic growth, innovation, and sustainability. By focusing on tax reliefs, supporting SMEs, enhancing innovation funding, reforming regulations, and promoting green investments, the next government can build a resilient and prosperous economy for all.