October 2025 Newsletter
Chancellor urged to cut National Insurance but hike Income Tax in Autumn Budget
Chancellor Rachel Reeves has been urged to cut National Insurance contributions (NICs) and increase Income Tax to create a 'level playing field' and protect workers' pay.
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The Resolution Foundation said the Chancellor should make a 2p cut to NICs as well as a 2p rise in Income Tax in the Autumn Budget.
The think tank said the move would help to address 'unfairness' in the tax system.
Adam Corlett, Principal Economist at the Resolution Foundation, said: 'Significant tax rises will be needed for the Chancellor to send a clear signal that the UK's public finances are under control.
Any tax rises are likely to be painful but given the fallout from the recent employer NICs rise, the Chancellor should do all she can to avoid loading further pain onto workers' pay packets.
She can do this by switching our tax base away from employee NICs and onto Income Tax, which is paid by a far broader group in society. This should form part of wider efforts to level the playing field on tax, such as ensuring that lawyers and landlords face the same tax rates as their clients and tenants.
These sensible reforms would raise revenue while doing the least possible harm to workers and the wider economy. And by acting decisively, the Chancellor can turn her full attention back onto securing stronger economic growth.'
Source: Resolution Foundation
Budget Board must focus on easing the cost of doing business, says IoD
The government's Budget Board must focus on easing the cost of doing business, says the Institute of Directors (IoD).
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The board has been created to link top ministers and 10 Downing Street officials with the Treasury in the run up to the Autumn Budget on 26 November.
The board will meet weekly and will be chaired by the Prime Minister's new economic advisor Baroness Minouche Shafik and Treasury Minister Torsten Bell.
Anna Leach, Chief Economist at the IoD, said:
'We are glad to see the government putting renewed energy into the growth agenda with a particular focus on business.
It is positive that the government has announced the creation of this body, bringing together teams across Number 10 and the Treasury, focussed on ensuring that the Autumn Budget delivers vitality to the economy.
Business confidence has fallen to historically low levels since last year's Budget. Our own economic confidence index fell to its lowest ever level in July this year, with taxes and the wider economic climate dominating concerns amongst business leaders.
To be successful, this board needs to deliver a Budget that really works for business, with swift action to remove barriers to growth from the regulatory and tax system. We look forward to engaging constructively with the board to ensure the voice of enterprise is at the heart of its work.'
Source: IoD Website
Chancellor to explore reforms to business rates on second premises
Chancellor Rachel Reeves will look at fixing the cliff edges in business rates that can discourage small business investment and growth, according to a report from HM Treasury.
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Currently when a business opens a second property, they will lose access to all Small Business Rates Relief (SBRR) unless they meet specific conditions, holding businesses back from expanding.
That means that a local bakery would have to pay thousands of pounds more for opening a small shop in the next village.
The report confirms that the government will review how SBRR can support business growth, potentially lifting growth and living standards in the future for those who work in these small businesses.
This is one of the options being explored in the Treasury's business rates interim report.
Chancellor of the Exchequer, Rachel Reeves, said:
'Our economy isn't broken, but it does feel stuck. That's why growth is our number one mission. We want to see thriving high streets and small businesses investing in their future, not held back by outdated rules or strangled by red tape.
Tax reforms such as tackling cliff-edges in business rates and making reliefs fairer are vital to driving growth. We want to help small businesses expand to new premises and building an economy that works for, and rewards working people.'
Source: HM Treasury Website
Covid repayment window opens
The government has launched a voluntary repayment scheme to allow recipients of financial Covid support to repay outstanding money they were not entitled to or did not need, with 'no questions asked'.
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The government says that over £10 billion was lost to pandemic fraud, flawed contracts and waste under the previous government's pandemic era procurement and schemes. £1.54 billion has already been recovered through existing efforts.
It says it will do everything in its power to recoup money lost to Covid fraud.
All Covid schemes, including loans, grants, social security and tax benefits fall under the voluntary repayment scheme.
The government says that individuals who don't take the chance to come forward and repay outstanding money could face prosecution when it receives additional investigatory powers next year.
Changes to how director disqualification works could also see more people stopped from being involved in businesses or facing compensation orders.
A Covid fraud reporting website is also being launched to allow members of the public to report suspected fraud.
Covid Counter-Fraud Commissioner Tom Hayhoe said:
Our message to those who still owe Covid era money is simple – pay now, clear your conscience, or face the consequences.
This money belongs in communities, the NHS, police and armed forces. Those who don't take up this straightforward offer and have knowingly, wrongly claimed tax-payer-funded help could face prosecution, disqualification, or prison.
The digital trail is forever, so the time to settle is now - before new investigatory powers and tougher rules come into force.'
Source: GOV.UK Website
Companies face prosecution risk as a new fraud law comes into force
Companies could be prosecuted and face unlimited fines if they fail to prevent fraud that their firm profits from under a new corporate offence.
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The offence will hold large organisations to account if they profit from fraud. It forms part of wider measures introduced by the government to tackle fraud and protect the UK economy.
These have been introduced as part of the Economic Crime and Corporate Transparency Act (ECCT) 2023 and came into force on 1 September.
Under the new law, which was passed with cross-Parliament support, large organisations can be held criminally liable where an employee, agent, subsidiary, or other 'associated person' commits a fraud intending to benefit the organisation.
In the event of prosecution, an organisation will now have to demonstrate to the court that it had reasonable fraud prevention measures in place at the time the fraud was committed.
Lucy Rigby KC MP, the Solicitor General, said:
'Fraud undermines our British values of fairness and playing by the rules. It hurts individuals and businesses, and harms business confidence.
This new legislation sends a clear message that large organisations must take responsibility for preventing fraud, and those that fail to do so will be prosecuted with the full force of the law.
This government is committed to protecting our economy and we're determined that those who don't play by the rules will be brought to book.'
Source: GOV.UK Website
Lowering VAT threshold would be manifesto breach, warns IPSE
Lowering the threshold for VAT registration in the Autumn Budget would breach Labour's manifesto, IPSE, the Self-Employed Association has warned.
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IPSE says that the government is in a bind both politically and economically. Having ruled out tax rises on 'working people' and hiking employer National Insurance contributions (NICs) the Chancellor's options are limited.
IPSE asks, in these circumstances will Ms Reeves reform taxes rather than raising them?
Sole traders are required to register for, charge and pay VAT once their annual turnover goes over £90,000.
IPSE says this threshold can put a ceiling on the ambitions of sole traders earning close to that amount; they may be reluctant to artificially increase the price of their services by 20%, giving customers and clients a reason to buy from competitors.
Newspaper reports say that the Treasury is now considering slashing the threshold to as low as £30,000.
Fred Hicks, Senior Policy and Communications Adviser at IPSE, said:
'This would make registering for VAT unavoidable for anyone whose main source of income is from self-employment, and then some.
Cutting the VAT registration threshold is not the same as increasing rates of VAT – even if it ultimately ends up with more people having to charge and pay it. And if this radical reform did go ahead, this may well be how government justifies it.
But make no mistake – in IPSE's eyes, it absolutely would be a breach of their commitment – and a breach of faith – to claim that dragging people into paying a new tax is not the same as putting their taxes up.'
Source: IPSE Website
AI to boost trade by nearly 40% by 2040 if gaps are bridged, says WTO
Artificial intelligence (AI) could boost the value of cross-border flows of goods and services by nearly 40% by 2040, thanks to productivity gains and lower trade costs, according to a World Trade Organization (WTO) report.
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However, the report says that for AI and trade to contribute to inclusive growth policies need to be in place to bridge the digital divide, invest in workforce skills, and maintain an open and predictable trading environment.
William Bain, Head of Trade Policy at the British Chambers of Commerce (BCC), said:
'This report is a call to action for business and policymakers worldwide to ensure we realise the full benefits of AI in boosting global trade, productivity and skills.
It identifies a possible AI premium for global economic growth of 12-13% and goods export growth of up to 37% by 2040. AI can boost exports by reducing red tape, speeding up journey times, and cutting customs delays. AI-services are also highly exportable, and can be a major source of growth, in an area where the UK is already a world leader.
But tariff and technical barriers to trade need to be dealt with to allow AI to realise these full gains. We also need to ensure that electronic transmission of services across the world remains tariff-free.'
Source: WTO Website, BCC Website
Failed housing transactions cost £1.5 billion a year
Failed housing transactions cost consumers and the economy at least £1.5 billion every year, according to research published by Santander.
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The research says that over 530,000 transactions fall through every year due to the UK's antiquated homebuying process.
The economic analysis shows that the direct cost to consumers of this through expenditure on elements such as mortgage and solicitors' fees that consumers cannot recoup, is £560 million annually.
However, the impact is not just limited to consumers. The repercussions on the broader economy include the loss of work output due to stress and the time taken to buy a property within work hours, estimated at £380 million per year.
There is also the cost of people's reduced wellbeing, estimated to be £400 million and wasted leisure time, approximately £170 million.
David Morris, Head of Homes at Santander UK, said:
'The homebuying journey is still operating in the confines of a framework that was established a century ago. This antiquated system is an increasingly heavy anchor weighing on the economy and fixing it must be key.
While the government has put the housing market firmly on its agenda – as this research shows - the scale of the challenge remains largely underappreciated, and that's why we're calling for powerful reforms to give buyers and sellers more confidence, ease the financial and emotional strain and create a housing system fit for the needs of today's consumers and economy.'
