Andrew Griffith tells Burnham to rule out Budget tax rises
Shadow chancellor Andrew Griffith will urge Labour to rule out further tax rises on businesses at next month’s Budget, as the Conservatives set out plans to cut the compliance burden facing small firms and the self-employed.
In his first major speech since taking the role, Griffith will call on Andy Burnham and chancellor John Healey to use the 28 October Budget to simplify the tax system and pause an expansion of Making Tax Digital.
He will also announce a review of the tax burden on small businesses, led by Conservative peer Lord Mackinlay and outgoing Centre for Policy Studies director Robert Colvile, which is due to report in December.
“Labour are squeezing small businesses dry,” Griffith is expected to say in a speech at Capital City College Group in London on Thursday. “They are taxing them too much and crushing them with a complex tax system that is working against them”.
His warning lands as Healey prepares his first Budget amid pressure from businesses and trade unions over the direction of tax policy.
Burnham this week pledged a “culture shift in how Britain does business”, promising to make it easier to start and grow companies following meetings with entrepreneurs and some of Britain’s biggest business leaders in Downing Street.
Griffith will call on the government to rule out new business taxes and argue that the cost of complying with the existing system has become a significant burden in its own right.
The Federation of Small Businesses estimates tax compliance costs smaller firms £25bn a year, with the average business spending 44 hours annually on tax administration.
HMRC puts the annual cost to businesses at £15.4bn. But the National Audit Office has previously said the research underpinning the estimate has not been updated since 2015 and does not account for Making Tax Digital.
Griffith’s review will examine HMRC’s performance, the complexity of filing returns and claiming reliefs and the tax treatment of the self-employed.
It will also look at the IR35 off-payroll working rules and consider whether changes introduced in 2017 and 2021 increased compliance costs unnecessarily.
The Conservatives have previously pledged to reform IR35 and make HMRC more accountable to small businesses.
Reform attacks Tory record
The announcement has drawn criticism from Reform UK, which is also targeting small businesses with a package of tax and regulatory policies.
Reform shadow chancellor Robert Jenrick accused Griffith of failing to tackle the same problems while the Tories were in government.
“Andrew Griffith was the very person who abolished the Office of Tax Simplification after the tax code ballooned to 23,000 pages – why on earth would anyone believe him now?” Jenrick said. He also criticised the Conservatives’ record on IR35 and the VAT registration threshold.
Reform has pledged to raise the VAT registration threshold from £90,000 to £150,000, reverse the increase in employers’ National Insurance for British workers and replace GDPR with a lighter-touch privacy regime.
“Simply asking Labour not to raise taxes isn’t enough”, Jenrick said. “Britain needs a radical change in direction, not more hollow talk from a stale Tory opposition that had every opportunity to fix the system and failed.”
Griffith will meanwhile call on Healey to pause the planned expansion of Making Tax Digital for Income Tax.
The regime is due to cover sole traders and landlords earning more than £30,000 from April 2027 before extending to those earning more than £20,000 the following year.
Meanwhile, ovver 800 hospitality firms have called for VAT on the sector to be cut from 20 per cent to 10 per cent, while unions are pressing Healey for measures including higher taxes on large technology companies and banks.