Monthly Round-Up – July 2023

Summer is well underway and, as we reach the end of July, there have been several developments affecting the world of business and tax.

Here is the latest news you need to know.

UK Inflation Falls

The Office for National Statistics announced that UK inflation had fallen to 7.9%, exceeding initial expectations that it would decline to 8.2%.

The International Monetary Fund said the UK’s headline inflation rate was on track to reach 5.25% by the end of 2023, bringing it close to Prime Minister Rishi Sunak’s target of halving inflation by the end of the year.

Inflation was reported to have fallen partly because petrol and diesel prices had decreased by more than a fifth, while increases in food and drink prices had begun to slow.

In July, Ofgem reduced the consumer energy price cap following a fall in wholesale gas and electricity prices. This meant inflation was expected to decline further over the coming months.

Following the reduction in inflation, interest rates were expected to rise less sharply than previously anticipated by the Bank of England.

AI Could Create More Jobs in the Gaming Industry

Games developers suggested that using artificial intelligence within the gaming industry could help create more jobs.

Dr Richard Wilson, Chief Executive of TIGA, said that AI would “reduce the cost of making games and speed up the process”.

Using artificial intelligence to assist with the creation and development of games could allow more studios to open, resulting in the creation of additional jobs.

Wilson said: “It should allow games studios to automate routine aspects of game development and then use that space to be more creative and focus on other areas.

“Reducing the overall cost of development will mean more games studios, which should therefore mean more jobs.”

Flexible Working Bill Receives Royal Assent

Millions of workers across the UK were set to receive more flexible working options after the Employment Relations (Flexible Working) Bill received Royal Assent.

The legislation required employers to discuss flexible working requests with their employees. Workers would be entitled to make two requests within a 12-month period.

Flexible working could include changes to working hours or patterns, adjustments to start and finish times, or permission to work from a location other than an employee’s usual workplace.

Business and Trade Minister Kevin Hollinrake said: “A happier workforce means increased productivity, and that’s why we’re backing measures to give people across the UK even more flexibility over where and when they work.

“Not only does flexible working help individuals fit work alongside other commitments—whether it’s the school drop-off, studying or caring for vulnerable friends and family—it’s good business sense too, helping firms attract more talent, increase retention and improve workforce diversity.”

Scottish Businesses Look Towards a Positive Future

Research by Rathbones found that 46% of businesses in Scotland planned to expand during the following 12 months, while 43% intended to seek additional investment.

This provided a positive sign despite the difficult economic conditions affecting businesses across the country.

Business owners in Scotland were exploring opportunities to support their companies by investing, expanding and selling where appropriate to improve their performance.

The Head of Scotland at Rathbones said: “Times have been challenging for UK businesses, so it is certainly positive to see such resilience and ambition among business owners and entrepreneurs.

“This confidence and desire for success—and, moreover, growth—should help provide some stability and strength to the UK economy.”

UK Government Borrowing Falls

Tax increases and additional VAT receipts resulting from rising prices contributed to a reduction in UK government borrowing.

The Office for National Statistics revealed that the monthly budget deficit stood at £18.5 billion, down from £20 billion during the previous month and below the forecast of £22 billion.

Chancellor Jeremy Hunt responded to the figures, saying: “Now more than ever, we need to maintain discipline with the public finances. We are at a crucial juncture and need to avoid reckless spending.

“As this week’s fall in inflation showed, we will start to see results if we stick to our plan to halve inflation, grow the economy and get debt falling.”

HMRC Provides Tax Advice and Support

Through its Voluntary and Community Sector Grant Funding programme, HMRC offered £5.5 million to organisations providing free support and advice to people who:

• Did not understand their tax obligations or available entitlements.
• Were digitally excluded from HMRC’s online services.
• Experienced difficulties when interacting with HMRC.

The funding was designed to:

• Help people manage and comply with their tax responsibilities.
• Support customers with their individual needs.
• Help people access and use HMRC’s digital services.

Applications for funding were open from 24 July until 21 August 2023.

Successful applicants were due to be notified in October, with funding beginning in April 2024.

Looking Ahead

That is all the news from July. Have a fantastic August, and remember to follow the latest developments in the business and tax world as we head towards autumn.