Business leaders in the UK are cautiously optimistic about economic growth, according to the Institute of Directors (IoD). The IoD’s optimism index improved to minus 61 in August, its highest since last October. However, concerns about potential tax rises in the autumn budget persist. A BDO survey revealed that 74% of mid-sized businesses exceeded their growth targets, driven by consumer demand and AI productivity. IoD chief economist Anna Leach noted that while confidence has improved, 47% of leaders reported that the tax burden has harmed their finances. Leach stated: “Higher costs and rising regulatory risks threaten to undermine ambitions for jobs and growth.”

UK businesses are increasingly offshoring skilled jobs to South Africa due to rising employment taxes. The Legends Agency reported a 25% increase in inquiries since the National Insurance contributions rose from 13.8% to 15% in April. Alex Fenton, a director at the agency, noted that many jobs that could go to British talent are now being filled by South African workers, who benefit from lower salaries and a 3% tax rate. Fenton said: “Entrepreneurs are just looking at… saying, ‘I don’t want to hire in the UK any more. It’s incredibly expensive.'” More than 145 UK firms have hired over 1,100 remote employees in South Africa since July 2024.

The Confederation of British Industry (CBI) warns that the private sector is set to shrink due to fears of tax increases in the upcoming autumn Budget. The latest survey, involving 877 respondents, indicates a decline in investment and hiring across all industries, with consumer services facing the steepest drop. CBI economist Alpesh Paleja stated: “The autumn Budget must not add to that strain with further tax rises that risk undermining investment and growth.” The report highlights rising inflation and employment costs as additional challenges for businesses.

Sir Keir Starmer’s new economic adviser has advocated for more wealth taxes on inheritance, land and property, the Sunday Telegraph reports. Minouche Shafik, a former deputy governor of the Bank of England, has been brought in to help guide policy ahead of the autumn budget. The paper cites three occasions when Baroness Shafik called for redistributive taxes on wealthier pensioners, property owners and even owners of prestige cars. She also co-chaired an inquiry set up by Torsten Bell, who is helping to write the next Budget. He has called for the residence nil-rate band, which allows a couple to pass on an extra £350,000 of property tax-free, to be abolished. The Economy 2030 report’s proposals included more than doubling the basic rate of dividend tax to 20%; cutting the £270,000 cap on tax-free pensions to £40,000; and raising capital gains tax to 37% on shares and 53% on property.

UK bank shares fell sharply on Friday, losing nearly £8bn in market value. This decline followed a report from the Institute for Public Policy Research (IPPR) advocating for a windfall tax on large lenders. NatWest Group experienced the most significant drop, with a 5% decrease in share price. Lloyds Banking Group and Barclays also saw declines of 4.5% and 3.6%, respectively. The IPPR’s report suggests a new tax to recover profits from quantitative easing, which has led to a £22bn annual loss for public finances. George Godber, a fund manager at Polar Capital, commented: “Banks are already incredibly highly taxed in the UK…There are compelling arguments to leave this well alone.” He explained that hiking taxes on banks would lead to a “doom loop of lower lending and lower growth and in turn lower tax revenues.”

Tax experts warn that tens of thousands of people could face penalties after HMRC’s online filing system failed to reflect Rachel Reeves’ 2024 Budget changes to capital gains tax (CGT). Rates increased from 10% to 18% for basic-rate taxpayers and from 20% to 24% for higher-rate taxpayers on most assets from October 30, 2024. However, HMRC’s system was locked before the update, causing miscalculations for those filing digitally without advisers. Mistakes could lead to underpaid tax, 8% interest charges, and fines up to 30%. The issue arises as HMRC prepares a wider digital overhaul, including mandatory third-party filing from 2026, raising concerns about system readiness and confidence in tax administration amid Reeves’ tighter fiscal strategy.

Rachel Reeves has secured a record £900m from the digital services tax (DST) for the Treasury, surpassing last year’s £700m. The DST, a 2% levy on tech firms, was expected to raise £275m in its first year but has consistently exceeded forecasts. US President Donald Trump has pressured countries to drop the tax, threatening substantial tariffs on those that do not comply. Matthew Sinclair from the CCIA stated: “The UK digital services tax increasingly stands out as the burden grows.” The Treasury maintains the tax is fair and intends to repeal it once an international agreement is reached.

Steve Perez, founder of Global Brands, is under pressure to leave the UK due to new inheritance tax reforms. The changes will reduce business property relief from 100% to 50% starting April 2026, forcing many family business owners to consider selling their companies. Perez expressed concern over the future of his business and the jobs it provides, stating: “This is a tax on the jobs of working people.” A report by the Family Business Research Foundation indicates that 52% of family businesses may need to sell to meet tax liabilities.

Employers are concerned that the Employment Rights Bill could lead to job losses with the British Chambers of Commerce and other organisations urging the Government to reconsider certain aspects of the legislation. Jane Gratton, deputy director of public policy at the BCC, said: “Reducing costs and barriers, and boosting competitiveness for business, must be a priority for government.” The bill, supported by Deputy Prime Minister Angela Rayner, may impose costs of up to £5bn on businesses, potentially resulting in lower wages or reduced headcounts.

Large organisations are now criminally liable for failing to prevent fraud, effective today. Under the Economic Crime and Corporate Transparency Act 2023, businesses can be prosecuted if they profit from fraud committed by employees, even without managerial knowledge. They must prove they had reasonable fraud prevention measures in place to avoid unlimited fines. Fraud minister Lord Hanson called it a “pivotal” moment, while Nick Ephgrave from the Serious Fraud Office stated: “This is a significant new tool for prosecutors to tackle serious and complex fraud.” The law applies to organisations with over 250 staff, £36m in turnover, and £18m in assets and includes foreign companies with UK links.

Investec has revised its growth projections for the UK economy, predicting a 1.5% increase this year and 1.6% in 2026. This surpasses the Office for Budget Responsibility’s (OBR) forecast of 1%. The adjustment follows improved GDP data, which showed a 0.4% growth in June. Investec economists maintain their expectation of an interest rate cut in November, despite recent inflation data affecting market predictions. They noted that if growth aligns with their forecasts, the OBR may avoid cutting its own projections, potentially reducing the need for tax increases.

Eswar Prasad asserts that commercial and central banks should be fixing the underlying inefficiencies stablecoins have exposed in modern financial systems rather than reacting defensively against new technologies.

Polish citizens are leaving the UK in record numbers, prompting removal firms to establish direct routes to Poland. Simon Hood, Executive Director of John Mason International, reported a staggering 4,066% increase in inquiries over the past year. Many Poles cite high taxes, crime rates, and the cost of living as reasons for their departure. Hood noted that most inquiries come from young families and entrepreneurs. He expressed concern over the loss of skilled individuals. A HM Treasury spokesperson defended the Government’s economic policies, highlighting job creation and business confidence.