Ahead of the General Election, Accountancy Age will be providing an analysis of the leading party’s manifestos and the impact they will have on the UK accounting industry. Today we discuss the Conservative party’s manifesto.
The Conservative Party’s 2024 manifesto, published June 11, offers a vision aimed at bolstering economic stability and growth.
It promises significant changes in taxation, particularly aimed at supporting businesses and the self-employed. One of the standout proposals is the plan to abolish the main rate of National Insurance for the self-employed by the end of the next Parliament.
This policy is poised to relieve a substantial tax burden from millions of self-employed individuals, simplifying their financial planning and potentially increasing their net income.
Additionally, the manifesto commits to not raising the rate of corporation tax, providing a stable tax environment for businesses. This stability allows companies to plan their long-term investments with greater confidence.
For smaller businesses, the VAT registration threshold is set at £90,000, removing 28,000 small businesses from the obligation to pay VAT altogether. This threshold will be kept under review to ensure it continues to benefit small businesses effectively.
“We’re pleased that the Conservative Party agrees with our view that the UK should be the best place to start or grow a business, with small and medium-sized businesses the lifeblood of the economy,” says Iain Wright, ICAEW Managing Director, Reputation and Influence.
“In our own manifesto, we urged the next government to drive levels of R&D investment beyond 3% of GDP, so we welcome their commitment to increase public spending on R&D to £22bn a year if they form the next government.”
Business Rates and Support
The Conservative Party plans to support small businesses and high streets with a £4.3 billion business rates support package over five years.
This initiative aims to ease the financial burden on high street, leisure, and hospitality businesses, which have faced significant challenges in recent years.
Additionally, improvements to the public sector procurement system are designed to ensure that small businesses secure a larger share of public contracts. This can provide a crucial revenue stream for SMEs, enhancing their financial stability and growth prospects.
Regulatory Environment
A critical aspect of the manifesto is its focus on reducing regulatory burdens. The Conservatives propose lifting the employee threshold for reporting requirements, which is expected to save small businesses at least one million hours of administrative work per year.
This change is particularly beneficial for smaller companies that often struggle with extensive compliance demands.
Post-Brexit, the UK has an opportunity to streamline regulations further. The manifesto outlines plans to remove or reform over half of the EU laws inherited by the UK by July 2026.
This regulatory simplification is projected to save businesses £1 billion in administrative costs, freeing up resources that can be better invested in growth and innovation.
Investment and Financial Support
Access to finance remains a crucial issue for many SMEs. The manifesto addresses this by proposing to improve access to finance through expanding Open Finance and exploring the creation of Regional Mutual Banks.
These measures aim to provide SMEs with more financing options, helping them to invest in their operations and drive growth.
The Conservative Party also highlights continued support for research and development (R&D) through maintaining tax reliefs and increasing public spending on R&D.
This commitment is designed to foster innovation across various sectors, ensuring the UK remains a competitive player on the global stage.
Digital and Technological Advancements
Investment in digital infrastructure is another key focus area. The manifesto commits to achieving nationwide gigabit broadband coverage by 2030 and expanding 5G connectivity.
These advancements in digital infrastructure are essential for businesses to operate efficiently and remain competitive in a rapidly evolving technological landscape.
Promotion of digital invoicing and the enforcement of the Prompt Payment Code are also highlighted. These measures aim to support small businesses in managing their cash flow better, addressing a perennial challenge faced by many SMEs.
Environmental and Energy Policies
The manifesto outlines a commitment to an affordable transition to sustainable energy. The Conservatives guarantee no new green levies or charges while accelerating the rollout of renewables.
This pragmatic approach to net zero ensures that businesses can manage operating costs effectively while contributing to environmental sustainability.
No mention of audit
“Since the collapse of Carillion well over six years ago, we have been a vocal champion for the comprehensive reform of corporate governance and audit,” says Wright.
“It is therefore disappointing that despite having published, in government, a White Paper promising this, the Conservative Party makes no mention of it in this manifesto.”
The party had previously proposed creating a strong statutory regulator and enforce greater director accountability, with the aim of reinforcing the UK’s standing as a destination for foreign direct investment.
Wright also says the Conservatives still have a long way to go in improving trust and accountability in British business, enhancing governance at major UK companies, and reducing the risk of disorderly corporate failure.
“We echo the call in recent days by the Chief Executive of the Financial Reporting Council that the next government must make the necessary primarily legislation a priority,” Wright said.
Summary of key takeaways
For accountants, the Conservative Party’s 2024 manifesto offers a mix of tax reliefs, regulatory simplifications, and support measures designed to foster a more stable and growth-oriented business environment.
By abolishing the main rate of National Insurance for the self-employed and maintaining a steady corporate tax rate, the manifesto aims to relieve financial pressures on businesses and individuals alike.
The focus on reducing administrative burdens and enhancing access to finance for SMEs is poised to support smaller businesses in navigating economic challenges and capitalizing on growth opportunities.
Investments in digital infrastructure and a balanced approach to environmental policies further underscore the commitment to creating a conducive environment for business operations.
Read out Liberal Democrats guide here.