As businesses anticipate the Post-Budget squeeze, Digital Transformers accountant Ryan Pearcy weighs in with expert insight – and a roadmap for staying ahead of the curve.
By Ryan Pearcy
Unfortunately, the Budget has left little room for imagination when it comes to mitigating expenses or planning ahead. Thresholds have been frozen, benefits restricted and taxes increased – but it’s not all doom and gloom.
A small win for employers offering flexible work
One small but helpful update relates to homeworking expenses. While the Government has removed tax relief for individuals working from home, reimbursements from employers remain tax-exempt. If you refund reasonable and necessary homeworking costs, your employees won’t pay tax on the payment and your business can claim it as a deductible expense.
For organisations offering flexible or hybrid working, this could be a creative way to support employees with rising household costs. However, it’s important to note that doing so may add extra administrative and compliance requirements.
Reassessing your tech stack in a post-Budget world
Secondly, and perhaps most importantly, the Office for Budget Responsibility (OBR) has flagged AI as a key driver of productivity in the coming years. While tangible AI applications still need to mature, investing in technology can help businesses automate routine tasks, reduce reliance on manual labour, and uncover new insights and growth opportunities.
Recent tweaks to R&D allowances may also give businesses a chance to experiment with innovative solutions – such as customised AI – and explore potential tax advantages before committing to larger investments.
With employment costs rising, many businesses will need to focus on efficiency from within. Combined with new compliance requirements, this makes reassessing your technology stack more crucial than ever in a post-Budget landscape.
Key areas of focus for business owners should be in two areas:
- Should I pay myself a salary rather than extract dividends?
Always consult your accountant but for many this may now be a yes - Should we invest in an electric fleet?
Where historically this would have been a yes, this may now be a no. Once again, this will be down to individual circumstances and careful tax planning should be considered in this area.
As for personal finances, investing in property, shares or leaving funds in your bank just got more expensive. This would be the time to consult with your Independent Financial Advisor to re-assess plans.
But within all the gloom there were a couple of nuggets that may be worth exploring further:
The Role of AI
Most importantly, as part of the Budget, the Office for Budget Responsibility made a telling assumption that AI would have a notable impact over the coming years on productivity.
Although tangible AI applications need to improve, investing in technology for many businesses would help unlock automation and reduce the requirement for manual labour in many areas, as well as opening up insights and opportunities for business growth.
Either way, the pressures on employment costs will require many businesses to look inwards for efficiency, while additional compliance changes will require the use of modern systems. Clearly, re-assessing your technology stack has become much more important post-Budget.
The Road Ahead
In the end, the Budget will draw a sharp line between businesses that merely cope and those that choose to evolve. Challenges will test every organisation, but they also create a prime moment to modernise, rethink old habits and invest in technology that actually moves the needle. The businesses that take that step now will be the ones that stay resilient, competitive and ready for whatever comes next.
