Chancellor urged to address budget challenges – frozen thresholds, weak growth.

“`html

TLDR:

– The leading global accountancy body ACCA has written to the Chancellor highlighting concerns about frozen thresholds and weak growth in the upcoming Budget.

– Frozen allowances and thresholds are likely to burden HMRC and impact small businesses negatively.

Article:

In an open letter to the Chancellor, ACCA has raised concerns about the impact of frozen thresholds and weak economic growth ahead of the Spring Budget. The accountancy body is urging the government to address issues such as the freezing of allowances and thresholds, including personal allowances, PAYE, VAT thresholds, savings allowance, and the dividend allowance. ACCA warns that frozen thresholds could lead to more taxpayers being brought into the tax net, increased workload for HMRC, and hindrances to sustainable growth for businesses and individuals. The letter emphasizes the need for practical action to promote long-term growth and competitiveness on the global stage.

ACCA’s Head of Technical and Strategic Engagement, Glenn Collins, highlighted the unintended consequences of frozen thresholds on businesses, taxpayers, and HMRC services. The VAT threshold is identified as a major concern, particularly for small and medium-sized enterprises (SMEs) in struggling sectors. ACCA points out that frozen thresholds can deter companies from reaching higher tax brackets, ultimately slowing UK economic growth.

The letter also calls for a review of the impact of tax thresholds on business growth, with a focus on key sectors. ACCA suggests aligning thresholds with inflation to ensure fair taxation. The accountancy body warns that without proper incentivization for businesses to grow, the UK economy will continue to stagnate. The article highlights the potential impact of frozen thresholds on HMRC service levels, businesses, and the broader economy.

“`