Chancellor Rachel Reeves has unveiled plans to cut red tape as the government aims to kickstart economic growth.

The government says its Action Plan will save businesses across the country billions of pounds by cutting the number of regulators, streamlining their core legal duties and cracking down on complexity in the regulatory system.

It says regulators have signed up to 60 growth boosting measures, including fast-tracking new medicines to market through a new pilot to provide parallel authorisations from key healthcare regulators, so that patients can access the medicine they need quicker

Other measures will aim to boost infrastructure building by simplifying guidance to protect bat habitats and streamlining mortgage lending rules, including making it easier to re-mortgage with a new lender and reduce mortgage terms.

The UK’s business groups welcomed the announcement.

Dr. Roger Barker, Director of Policy at the Institute of Directors (IoD), said:

‘The Government’s Better Regulation Action Plan is a welcome shift to a more growth friendly approach.

‘In addition to the measures announced today, we would also like to see the government apply more rigorous and timely impact assessment procedures when considering new regulation. Non-regulatory solutions should always be considered, and the business case for new regulation should be subject to proper independent scrutiny by the Regulatory Policy Committee. There should also be a commitment to reviewing the ongoing effectiveness of existing regulation at regular intervals.’

Kate Nicholls, Chief Executive of UKHospitality, said:

‘A plan to cut red tape and reduce the burden on businesses is long overdue.

‘In sectors like hospitality, businesses have been struggling with too much cost and too many regulations for decades, and it has held back growth.’

Internet link: GOV.UK IoD UKHospitality

The government’s employment reforms are causing employers to put their hiring plans on hold, according to the Institute of Directors (IoD).

The IoD noted that there was a small increase in payrolled employees in the latest Labour market data released by the Office for National Statistics (ONS).

Estimates for payrolled employees in the UK increased by 9,000 between December 2024 and January 2025, said the ONS.

However, the ONS data also showed static job vacancies and increase in the unemployment rate.

Alex Hall-Chen, Principal Policy Advisor for Employment at the Institute of Directors, said:

‘Our data shows that half of business leaders facing higher National Insurance bills plan to reduce employment in response, and that business hiring intentions over the next year remain around lows last seen at the height of the Covid-19 pandemic.

‘The government missed an opportunity at Report Stage of the Employment Rights Bill to show that it has listened to business feedback about how to avoid the reforms damaging employment prospects.

‘The government’s Better Regulation Action Plan is a welcome shift in narrative, but such commitments will ring hollow if the principles are not first applied to its plans to increase the regulation and cost associated with employing staff.’

Internet link: IoD ONS

The government has stopped controversial plans to collect information about the exact hours worked by every employee in PAYE returns.

The data collection on employee hours was meant to start from April 2026, but the plan has been scrapped as part of the government’s attempts to reduce red tape and regulatory burden for business.

The (Draft) The Income Tax (Pay As You Earn) (Amendment) Regulations 2024 will not be progressed further after the results of a consultation were published.

HMRC said:

‘The government has listened to businesses and acted on their feedback about the administrative burden the requirements in these regulations would bring.’

The Chartered Institute of Taxation (CIOT) warned last May that the estimated one-off cost to businesses of £58 million and ongoing costs of £10 million – an average per business of £29 and £5 respectively- were “significantly underestimated” and that gathering additional data to provide to HMRC would lead to extra work for many employers.

The CIOT added it was unclear why HMRC wanted to collect this information and what they were going to use it for.

Eleanor Meredith, Chair of the CIOT’s Employment Taxes Committee, said:

‘We’re pleased to see the Government’s decision not to progress this legislation. We raised several concerns about the proposal, primarily the extra burden this would place on businesses to provide much more detailed data to HMRC.

‘We also raised concerns that the cost to businesses of complying with these requirements had been underestimated, despite the calculations being revised upwards during the course of the consultation.

‘It’s reassuring that we, and other representatives, have been listened to during this process and our warnings heeded.’

Internet link: GOV.UK CIOT

An increasingly complex tax system is costing UK businesses an estimated £15.4 billion a year in compliance, according to a report from the National Audit Office (NAO).

HMRC’s cost of collecting tax has risen by £563 million over the past five years due to added complexity in the system plus investments in staff and IT.

During this period, the government’s tax yield rose by £113 billion in real terms, said the NAO.

HMRC estimates that compliant UK businesses incur costs of £15.4 billion each year in meeting around 2,500 obligations across 27 policy areas. These include £6.6 billion of fees paid to agents, accountants and other intermediaries, £4.5 billion of acquisition costs, such as software, and £4.3 billion of internal costs.

The report warned that HMRC is underestimating these costs as it does not take into account all taxpayer obligations.

Frank Haskew, Head of Taxation, at the Institute of Chartered Accountants in England and Wales (ICAEW), said:

‘This report highlights how the UK’s increasingly complicated tax system is saddling businesses and HMRC with extra burdens and costs, which are growing in real terms. The report also substantiates our concern that the cost to businesses of complying with their tax obligations is likely to be understated.’

Internet link: NAO ICAEW

The government has introduced a package of support that it says will help the alcohol sector to grow.

From 1 February, draught relief has increased to knock 1p off duty on draught products whilst small producer relief – a measure to encourage craft brewers to innovate – is becoming more generous.

Together these tax cuts are worth £85 million and are tailored to support the alcohol sector to innovate and grow, according to HM Treasury.

The increase to draught relief, first announced at Autumn Budget, will affect around three in five of all alcoholic drinks sold in pubs, and represents the first duty cut on a pint of beer in 10 years.

As announced at the Autumn Budget, alcohol duty was also increased in line with inflation. The Treasury says this helps secure public finances and helps to fund the investment needed to grow the economy and fund public services.

Exchequer Secretary to the Treasury, James Murray, said:

‘Our pubs and brewers are an essential part the fabric of the UK and our brilliant high streets. Through draught relief, small producer relief, and expanding market access for smaller brewers, we will help boost sector growth and deliver our Plan for Change to put more money in working people’s pockets.’

Internet link: HM Treasury