The UK Prime Minister, Andy Burnham should adopt five key tax policy principles to kickstart the economy, say leading audit, tax and business advisory firm, Blick Rothenberg.
In an effort to raise these issues, the Head of Tax at Blick Rothenberg, Sean Drury, has written to the Chancellor, John Healey, to share the firm’s views.
Sean said: “Andy Burnham has a real opportunity to build a platform that restores confidence, where simplicity, fairness, growth, fiscal responsibility and durability reinforce one another rather than compete. There are five key principles he should adopt to achieve this:
Simplify the tax system and remove distortions
Build long-term certainty and stability into policy
Support growth, investment and UK competitiveness
Improve fiscal discipline and public sector value for money
Address pensions, savings and intergenerational fairness.”
He added: “The UK tax system has become too complex, creating behavioural distortions and avoidable administrative burdens. Capital Gains Tax (CGT) rates should be simplified, as should VAT exemptions and Inheritance Tax (IHT). To help achieve this, the Office of Tax Simplification should be reintroduced.”
Sean said: “The cliff edges that discourage work, saving or investment should be addressed, such as the High-Income Child Benefit Charge (HICBC), the effective 60% tax rate on earnings above £100,000 and tapered annual allowance for pensions saving.”
He added: “Tax policy must move away from short-term fixes that create uncertainty or complexity. There needs to be clear long-term economic direction, and policy capable of surviving political cycles. This will give individuals and businesses confidence to plan and reward long-term saving, working and investing.”
Sean said: “There should be proper consultation before significant tax reforms are enacted, and feedback from individuals, businesses and advisors should be taken into account.”
He added: “The UK needs a tax framework that actively supports growth, enterprise, investment and competitiveness. Corporation tax should be kept stable and internationally competitive. Capital allowances, which let businesses to deduct the cost of qualifying assets from their tax bill should be used to encourage investment. Current Research and Development (R&D) incentives should be maintained and stay predictable.”
Sean said: “Businesses should be incentivised to hire young people and provide training, work experience and market-needed skills. Sectors which employ large numbers of young workers, such as hospitality, could benefit from targeted Value Added Tax (VAT) relief. The UK’s retail sector, another key provider of entry level jobs, would benefit from the reintroduction of the retail export scheme, which allowed overseas visitors to recover VAT when shopping in the UK.”
He added: “To support the financial services sector, deregulation should be considered where appropriate and the non-dom regime changes reviewed so the UK remains attractive to mobile capital and talent. The UK’s advanced manufacturing, AI, cyber, space and defence-adjacent sectors should be backed with tax incentives that encourage investment. Domestic supply chains should be developed to reduce these sectors overseas dependency.”
Sean said: “Public finances should focus not only on raising revenue, but spending money well, and improving the balance between tax paid and value received. Government spending should be controlled by reviewing targeted reliefs and benefits to ensure they are directed where genuinely needed. Zero-based or outcome-based reviews could be used to manage spending. In Zero-based spending reviews, funding must be justified from scratch for each new financial period, rather than rolling over from the previous year’s budget. Outcome-based reviews evaluate spending on if it achieves specific, measurable results.”
He added: “To ensure value for tax money, Government procurement and project appraisals should be reformed. Stronger Treasury oversight and discipline should be applied to major projects, including defence procurement, with whole-of-life cost taken into account. HMRC’s capability, training and resourcing should be improved so tax money can be efficiently collected in the first place. Reducing waste and improving delivery can be equivalent to raising revenue — and may be more politically sustainable.”
Sean said: “The UK risks a long-term retirement savings crisis unless policy gives clearer and stronger incentives to save. The Government must recognise that workplace pension auto-enrolment alone may not deliver adequate outcomes for retirement. Pension tax relief, salary sacrifice and National Insurance Contribution (NIC) treatment should be reviewed to ensure saving is properly rewarded.”
He added: “Strengthening state pension deferral incentives should be considered – deferral is when people delay claiming their state pension and instead working for longer to save more. A credible long-term platform should help people save enough for retirement while protecting intergenerational fairness.”
Sean said: “Ensuring first time-buyers can get housing is an important part of intergenerational fairness. The Government should support first-time buyers with their deposits and affordable housing. Assisting developers is the best way to get more houses built. Finally, the reliance on transaction taxes such as Stamp Duty should be reviewed.”