Firms brace for Chancellor's tax squeeze

UK businesses are on high alert as the Chancellor prepares to announce a series of tax increases in her upcoming Budget, aiming to address a significant £30 billion fiscal shortfall. This anticipated tax barrage follows previous increases in employer National Insurance Contributions, which have already impacted business confidence. The cumulative effect of rising labor costs, including minimum wage hikes and enhanced worker rights, is placing considerable pressure on companies, especially within the retail and hospitality sectors.

Further financial strain is expected from potential caps on tax-free salary sacrifice for workplace pensions and increased business rates for property-heavy companies like warehouses and shops. The gambling industry faces a new betting tax, and banks are under consideration for a windfall tax. Business leaders are urging for leniency, warning that further tax burdens could lead to job losses and business closures, undermining efforts to revitalize high streets and encourage entrepreneurship.

Family-owned businesses are especially vulnerable to changes in inheritance tax relief, with a proposed £1 million limit on relief for business property potentially forcing many to sell their companies. Such measures could lead to break-ups and sales to private equity or foreign buyers, who would not face the same tax impositions. Concerns about policy leaks causing uncertainty have also been voiced, with a call for clear and stable government decisions.