Liz Truss: What Businesses Can Expect

As well as freezing energy prices, Liz Truss has also announced plans to slash business rates to help SMEs. The former Foreign Secretary has put tax cuts at the heart of her campaign.

With policies described as "Thatcherite", the new PM's goal is to give No 10 more control over the economy, according to analysts.

Truss Tax Cuts

Liz Truss has announced £30 billion worth of tax cuts that she plans to implement "from day one", according to a recent interview. The government is said to be looking at cutting VAT and income tax, despite her rival in the race to become PM, Rishi Sunak, labelling the plans as "regressive".

Truss also plans to cut business rates to help small companies. She has announced plans to reverse the increase in National Insurance, introduced in April 2022 by her predecessor, Boris Johnson.

As part of a general review of the tax system, the PM's other plans include lifting the green levy on energy bills for two years and also reviewing inheritance tax.

She believes her tax cuts (especially reversing the NI increase and scrapping the corporation tax rise) will help avert the downturn in the economy and prevent the anticipated recession.

Reports suggest Truss is also looking into pulling Britain out of a deal (agreed by Mr Sunak in October 2021) to set a global minimum tax rate of 15% on large companies.

Borrowing Plans

The aid package proposed by the PM will be funded by more than £100 billion worth of government borrowing. The new chancellor, Kwasi Kwarteng, suggested the intervention would last for two years, to help both businesses and householders get through this winter and winter 2023.

Liz Truss has also indicated she plans to put the Covid debt on the back burner for now, in the same way the government did with Britain's war debt in the 1940s. This could mean potentially refinancing the £311 billion borrowed by the government during the pandemic, so it can be paid back over a much longer period.

Truss has also pledged to fund a series of high-profile infrastructure projects, including a planned high-speed rail link from Liverpool to Hull, via Leeds and Manchester, which looks set to cost £39 billion.

Although, at this stage, much of the PM's announcement is speculative and there haven't been many concrete policy announcements, cutting VAT and announcing other financial support for businesses is seen as a major step forward, should all the plans come to fruition.

However, critics of the ambitious government plans suggest it may be too little, too late, as the economy is already heading into a downturn. With only two years until the next election, Truss faces a race against time to make her wide-ranging agenda a reality.

SMEs Seek Accountants' Help

For small businesses who have been weathering the storm and adapting to accommodate the changes introduced by Johnson's government, positive changes involving taxes and National Insurance are welcome.

However, since December 2021, acquiring the services of an accountant to manage company finances has become the number one requirement of SMEs, according to surveys. Not only is it becoming more complex to manage taxes and NI, but it is also detracting from business owners' core responsibilities of managing and growing their businesses.

Three out of four small businesses have recently used the services of an accountant. According to the Count on Accountants survey, 91% of businesses who have employed an accountant say this is a "critical part" of their company's operations.

For those facing the challenges of surviving in the UK today, an accountant has become the most consulted source of advice when making strategic business decisions.