Ashton Carter, Head of Corporate Law and Partner at Fisher Jones Greenwood LLP, a well-established and respected law firm with offices across Suffolk and Essex, explores the potential impact of the Autumn budget on businesses, particularly in light of Labour’s pledges in the June General Election.
The upcoming Autumn budget is expected to introduce significant changes in corporate law, with profound implications for businesses across the UK.
Labour’s pledges, from potential capital gains tax increases to employment law reforms and a stronger focus on sustainable industrial practices, indicate a shift towards increased regulation and enhanced employee protections.
For businesses, these changes present both opportunities and challenges, particularly in navigating compliance and adapting to the shifting landscape of transactional work.
Capital gains tax
As the Autumn budget approaches, speculation is growing over a possible increase in capital gains tax, with the key question being whether the rumours will be confirmed and, if so, whether the changes will take effect immediately from the date of the budget (30 October 2024).
Many clients are hurrying to complete sales and purchases before the budget to lock in the current tax rate and avoid a potential increase. This has created a high-pressure environment for clients and solicitors alike, leading to a surge in transactions and capital gains tax being paid.
If a tax hike is announced and takes effect immediately, many incomplete transactions could be cancelled or restructured, likely slowing the pace of corporate deals afterward.
The Labour Government faces the challenge of balancing a potential tax increase with maximising revenue from current transactions, while also maintaining a strong appetite for future deals.
Beyond capital gains tax, businesses should also ask themselves how their long-term strategies may need to adapt to higher taxes in the future.
Industrial strategy
Business owners are also waiting for clarification from the Labour Government on its comprehensive industrial strategy, which aims to promote long-term investment in clean energy and advanced technologies, potentially creating up to 650,000 jobs in future-oriented sectors.
While businesses in these sectors stand to benefit, others should prepare for a more regulated environment, particularly with a focus on sustainability and innovation.
The extent of these changes remains unclear, but companies that are already operating in or looking to enter these sectors will be closely watching the budget announcement.
For businesses outside these sectors, now is the time to consider how new regulations might impact their operations or present opportunities for diversification.
Employment contracts
Key employment law reforms could also be part of the upcoming budget, including Labour’s plans to ban exploitative zero-hours contracts and ‘fire and rehire’ practices. These reforms would introduce basic employment rights from day one, covering parental leave, sick pay, and protection from unfair dismissal.
These new rights would offer immediate protections to employees, requiring businesses to revise employment contracts, policies, and procedures to ensure compliance.
Changes to zero-hour contracts and flexible working arrangements would also demand significant input from businesses. While these reforms aim to improve employee protections, employers will face a substantial list of new requirements and changes they will need to implement.
Business owners should now consider whether their current employment practices are aligned with potential reforms and prepare for significant revisions to employee policies.
Are you prepared?
The upcoming Autumn budget could bring significant changes to corporate law, particularly in the employment sector, with potentially far-reaching consequences.
These reforms could drastically alter employment practices and create new challenges for businesses in ensuring compliance with updated regulations. Additionally, they may have a major impact on the volume of transactional work carried out by businesses as they adjust to the new legal landscape.
The Labour Government’s focus on employee protections in particular is likely to create additional administrative burdens for businesses, so it is important to start preparing for these changes now.
If you would like to speak to an expert in the Corporate Law team at Fisher Jones Greenwood LLP about how these potential changes and compliance requirements might affect your business, please email
info@fjg.co.uk.
