The budget is nearly here! Now a month away, falling on 28 October, the Autumn Budget is an annual financial statement detailing the nation’s public finances, tax plans and spending limits.
While we cannot know what the Budget has in store, businesses that are trading in the UK must understand the impact it could have on them and how they can mitigate against the risk.
What will be announced in the Autumn Budget?
While we do not know exactly what the Autumn Budget may include, rumours are circulating online about what it may hold.
The first thing that tends to change year-on-year is the National Living Wage. With the frozen tax-free thresholds in place until 2031, employees are quickly pushed into higher tax brackets, forcing salary structure reviews early.
Additionally, there may be a surcharge on high-value housing, which could increase the cost of moving international talent.
It could also be the case that there is a change to business tax rates. A change to corporation tax can often alter the profitability of regional headquarters and local subsidiaries.
On top of this, there could be a change to capital allowances, altering how cross-border buisnesses can calculate write-offs for equipment and tech investments.
It tends to be the case that when the Budget is announced, temporary market volatility in currency follows. This can complicate cross-border invoicing and profit repatriation.
These are just some of the changes that could come in the Autumn Budget. However, we will not know for sure what is announced until 28 October.
Until then, buisnesses should be ensuring that they are preparing themselves for any eventuality of the budget.
How should internationally trading businesses prepare?
International businesses can prepare for the upcoming budget in more productive ways other than trying to guess what is coming.
The first idea would be to conduct multi-scenario financial modelling, so that your business can be prepared for any outcome of the Budget.
Do not establish your financial forecasts around the most likely outcome. Instead, businesses need to establish adaptable multi-tier budgets that account for different policy shifts.
Businesses should also be reviewing their transfer pricing strategies, intercompany loan agreements and dividend routes. This is because tax shifts in one region can quickly disrupt global profit allocation.
To do this, businesses should be working with international accountants, like us, to map out how changes to tax structures could penalise cross-border transactions.
Additionally, it could be beneficial to evaluate your businesses vulnerabilities and cash flow. You need to ensure that your operational cash flow is shielded from sudden policy shifts.
It is always advisable to maintain a localised liquidity buffer to cover any unforeseen regulatory compliance costs.
While preparation is key to success, nobody knows what the Budget has in store. Therefore, it is imperative to ignore speculative pre-Budget rumours and instead focus on what your business can do to ready itself for the Budget.
Speak to our team
Understanding how the Budget may impact your international business is imperative to ensuring that your business will be viable in the next tax year.
We understand that understanding changing regulations can be confusing for businesses operating internationally. We are here to help you to ensure that you are prepared for any eventuality of the budget.
Need some advice on Budget preparation? Get in touch with our team for support!