An HMRC inquiry into research and development tax credits has found that claims for business tax incentives were more likely to be non-compliant if they were made with the help of a specialist agent. HMRC says it recognises the “vital role” agents play but said some “provide poor or incorrect advice to customers about what they are entitled to claim.” Overall, the tax office estimates that in 2021/22, more than one in four claims on a version of the scheme for SMEs were down to fraud and error. This had been reduced to about one in seven by the most recent financial year. The review of R&D tax credits also put the cost of fraud and error between 2020 and April 2024 at £4.1bn. Separate research by RSM UK shows that more than a third of technology businesses have submitted an R&D claim which was initially approved but later challenged by HMRC, resulting in companies having to make a repayment.

Britain’s largest employers are bracing for a £1bn tax increase due to the hike in employers’ National Insurance contributions set out in the Budget. This change, which raises the employer rate from 13.8% to 15% and lowers the payment threshold from £9,100 to £5,000, is expected to burden firms like Amazon and Royal Mail with additional costs of £110m each. Business leaders, including Stuart Machin of Marks & Spencer, have condemned the hikes as a “double whammy,” warning that they could stifle wage growth and inflate prices. The Treasury aims to raise £25bn annually from these measures, but concerns are mounting over their impact on various sectors, including retail and telecommunications. Some of the UK’s biggest supermarkets – Tesco, Asda, Sainsbury’s, Morrisons and M&S – are facing a £650m increase in their costs, while Allison Kirkby, CEO of BT, indicated that the firm would incur a £100m loss and may need to raise prices to mitigate the effects.

Analysis by Deutsche Bank suggests that the hike to employers’ National Insurance contributions announced in the Budget could mean 100,000 fewer jobs. Sanjay Raja, the bank’s chief UK economist, said the increase “could further strain the labour market,” warning: “Ultimately, whether it’s through cutting existing payrolls or trimming hiring plans, the increase to NICs will hit employment/employment growth.” Saying that “a little over 100,000” jobs – including future jobs – might be lost, he added: “This won’t happen all at once. More likely, we will see declines in hiring and employment growth, with some firms adjusting more immediately to the increase in tax.”

The Institute for Fiscal Studies (IFS) has urged the Scottish Government to reconsider plans for increasing income tax for higher earners in the upcoming Budget. The IFS highlighted that previous tax increases may have “slightly reduced” revenues, citing studies from HMRC. David Phillips, associate director at the IFS, noted that “increases in the top rate of tax are unlikely to raise much” revenue, suggesting that the government should “at least pause” any further tax hikes. The report indicates that individuals earning £125,000 annually pay around £5,200 more in income tax in Scotland compared to their counterparts in the rest of the UK.

Vlad Tenev, chief executive and co-founder of investment platform Robinhood, believes the UK’s stance on cryptocurrency trading is “backwards” compared to regulated forms of gambling. Crypto trading has drawn the attention of regulators, with the Financial Conduct Authority having warned people that they should be prepared to lose all of their money if they invest in digital assets, while the Treasury Committee last year urged the Government to regulate crypto trading as gambling – a call that was rejected by the Treasury. Mr Tenev said: “On a policy level, it’s just strange to me that, like: ‘The gambling will continue, but suddenly, with crypto and margin trading, we would have a problem with that.’ That just seems backwards to me.”

C.S. Venkatakrishnan, the chief executive of Barclays, has praised Rachel Reeves for taking an “important step in promoting investment and risk-taking,” suggesting that the Chancellor has “underlined that the financial sector is a critical part of the national interest.” This comes after Ms Reeves set out a series of reforms designed to ease rules regulating the City with the aim of bolstering economic growth. The Chancellor has outlined plans to replace parts of the tough post-financial crisis regime on senior managers and certification; reform the consumer redress system for customers of financial companies; and shake-up the pensions industry. Mr Venkatakrishnan says he is “encouraged” that the Chancellor and Andrew Bailey, governor of the Bank of England, “have seized the occasion by defining a constructive and co-operative agenda that promotes the role of the financial industry and supports free trade.” He added that they “seek to address imbalances in regulation, which have promoted safety at the expense of growth.”

Job openings increased by 4.8% in the lead-up to the Budget, indicating that businesses remain confident despite a general slowdown in hiring. Figures from the Recruitment and Employment Confederation (REC) show a 4.8% jump in new job postings between September and October to 706,480. However, the overall number of active job postings fell by 0.6% between September and October. Neil Carberry, chief executive of the REC, said the data shows “signs of life” in the labour market, adding that the figures “highlight the level of underlying resilience in our jobs market.” The REC noted significant demand in Christmas-related sectors, with delivery drivers and couriers seeing a 79% increase in job postings. The survey also reveals that the sectors most in need of workers are software engineers and programmers, solicitors and lawyers, and chartered accountants. Official figures from the Office for National Statistics detailed a decline of 9,000 payrolled employees in September, with a provisional estimate pointing to 5,000 losses in October.

With a number of firms having let go of staff for minor infractions, human-resources consultant Suzanne Lucas suggests that the increase in policy enforcement may be a result of companies wanting to rid themselves of staff obtained during a post-pandemic hiring spree, saying: “When you need to cut head count, you tighten up the rules.” It is noted that EY recently dismissed workers who were caught watching multiple training videos at the same time; Meta sacked employees for spending meal allowances on other items; and Target has fired employees who jumped the queue to snap up popular items ahead of customers.

Recruiters are encouraging jobseekers to utilise AI tools for applications, enhancing their chances by tailoring CVs and cover letters to meet job requirements effectively.

Female board members at FTSE 100 companies are earning 69% less than their male counterparts, with women averaging £335,953 compared to men’s £1,073,445, according to law firm Fox & Partners. The gap for executive director pay is 29.8%, with female executive directors earning £2,332,334 versus £3,150,424 for males. Women who hold the role of non-executive director are paid an average of £127,593 while men in the position earn £191,381 – meaning the pay gap stands at 40%. Despite a slight increase in female executive directors to 43, women remain underrepresented in senior roles, with only nine female chief executives in FTSE 100 companies. The report notes that 91% of female directors hold non-executive roles rather than full-time executive positions. Catriona Watt, a partner at Fox & Partners, said: “It’s encouraging to see the gender pay gap has slightly shrunk over the past year for directors of the UK’s largest businesses but obviously the figures show that there is still a considerable way to go.”

Official data set to be released this week is expected to show that inflation is rising and has gone back above the Bank of England’s 2% target. Consumer prices are predicted to have risen by 2.1% in October, marking an increase from the 1.7% recorded in September. The Bank of England expects inflation to rise to around 2.75% in H2 2024 before falling again.