Business price pressures persist despite the UK's inflation rate falling to its lowest level since September 2021.

The business group warned that uncertainty remains amongst UK small firms, with its recent Quarterly Economic Survey showing that almost half of firms polled expect their prices to rise over the next three months.

Labour costs were cited as being one of the main drivers of price increases, and political and global uncertainty are also adding to firms' worries.

Commenting on the data, David Bharier, Head of Research at the BCC, said: '[The] figures confirm inflation is continuing to slowly head in the right direction. That's good news for both consumers and businesses. 

'Businesses will be keen to see how this data translates into changes on interest rate policy. More than a third of SMEs we surveyed at the start of the year have seen increased borrowing costs because of the current interest rate.'

The UK's annual inflation rate fell in March for a second consecutive month, dropping to 3.2%, according to the latest figures from the Office for National Statistics (ONS).

It is the lowest rate since September 2021 and eases the pressure on households amid the cost-of-living crisis.

Data from the ONS showed inflation continued to fall from 3.4% in February, as food prices rose at a slower pace than a year earlier. City economists and the Bank of England had forecast a slightly larger decline to 3.1%.

David Bharier, Head of Research at the British Chambers of Commerce (BCC), said: 'Today's figures confirm inflation is continuing to slowly head in the right direction. That's good news for both consumers and businesses.

'However, a lot of uncertainty remains among the firms we speak to. Our most recent Quarterly Economic Survey showed almost half of firms in fact expect their prices to rise over the next three months. Labour costs are cited as the main driver, but increasing political and global uncertainty is becoming a key factor.

'Business conditions more generally remain challenging, and firms need to see a clear long-term vision for the UK economy from politicians.'

The British Chambers of Commerce (BCC) has warned that UK small firms are 'treading water' on investment.

The BCC's Quarterly Economic Survey found that there was no improvement in business conditions in the first quarter of 2024 as measured by sales, cashflow and investment. It showed that levels of business confidence remained unchanged – 56% of businesses expect an increase in turnover in the coming 12 months.

Firms also anticipate hiking their prices in response to volatile inflation. Meanwhile, economic headwinds 'continue to impact heavily on business investment', with 'large sectoral disparities' in investment levels.

David Bharier, Head of Research at the BCC, commented: 'Although business confidence remains buoyant at the start of the year, most SMEs are still not reporting any tangible improvement to business conditions.

'The lack of investment among most SMEs is a real concern. Inflation, skills shortages, and an almost endless list of new trade barriers with the EU, coupled with a lack of clear direction on infrastructure and technology investment at the government level, have led to paralysis for many businesses.' 

The Federation of Small Businesses (FSB) has urged the government to ensure that small business growth is 'nurtured rather than left to wither'.

The FSB responded to figures published by the Office for National Statistics (ONS), which showed that GDP rose by 0.1% in February 2024 when compared to the previous month.

The business group has urged the government to consider how it intends to support existing businesses, especially in sectors which have been hit hardest by rising costs and strong headwinds.

According to the FSB, politicians must create 'bold and ambitious' plans to help small businesses grow, access finance, take on staff and deliver day in, day out for communities across the UK.

Commenting on the matter, Tina McKenzie, Policy Chair at the FSB, said: 'There are signs of cautious recovery among the small business community – but it is important to emphasise that this is not evenly distributed between sectors.

'It will take more than flashes of growth to raise spirits in the hospitality and retail sectors, for example, whose confidence scores were way below the headline figure for all businesses at the end of last year, according to our Small Business Index.

'Now the government needs to ensure that growth among small firms is nurtured, rather than left to wither.'

The Institute of Chartered Accountants in England and Wales (ICAEW) has warned that just five Making Tax Digital for income tax self assessment (MTD for ITSA) software products are ready for beta testing on 22 April.

On 22 April, private beta testing of MTD for ITSA will begin. The ICAEW warns that HMRC has revised the list of software products that support MTD for ITSA, and the new list outlines five developers that are set to release their MTD for ITSA products on 22 April.

Chosen software must be able to create and store digital records of business income and expenses; send quarterly updates; receive information from HMRC; and make your final declaration by 31 January as part of the submission of tax returns.

HMRC recommends checking with the software providers when choosing software to ensure it suits businesses' needs.

Commenting on the issue, Caroline Miskin, Senior Technical Manager at the ICAEW, said: 'Choosing the right software is a critical decision. Software products do need to comply with HMRC's minimum functional standards but these are quite minimal. This means there will be very significant differences between products.

'Cost is obviously a major consideration. It is disappointing that a wider range of software is not yet available.' 

Around 7.4 million people in the UK struggled to pay a bill or a credit repayment in January, according to the Financial Conduct Authority (FCA).

The figure is lower than last year but is still significantly higher than before the cost-of-living crisis began.

According to the FCA, in January 2023, after the Russian invasion of Ukraine and the subsequent start of the cost-of-living crisis, the number of people in financial difficulty almost doubled to 10.9 million.

The FCA survey also suggested 5.5 million people had missed a bill or credit payment in the six months to January 2024.

In addition, one in nine people also had no disposable income, the FCA said.

Sheldon Mills, Executive Director of Consumers and Competition at the FCA, said: 'Our research shows many people are still struggling with their bills, though it is encouraging to see some benefiting from the help that's available.

'If you're worried about keeping up with payments, reach out to your lender straight away. They have a range of support options and will work with you to agree the best one for you. You can also find free debt advice through MoneyHelper.'

One in ten highly skilled freelancers are currently out of work due to the impact of reforms to IR35 tax legislation, according to research published by the Association of Independent Professionals and the Self-Employed (IPSE).

IPSE's survey of more than 1,300 contractors in highly skilled roles found that 21% are not currently working, with half of them attributing this to the impact of reforms to IR35 tax rules.

Meanwhile, 55% of contractors said they had rejected an offer of work in the past 12 months due to it being deemed 'inside IR35' by the client. Furthermore, 24% said they intend to seek contracts overseas this year to escape the rules.

Andy Chamberlain, IPSE's Policy Director, said: 'Three years later, the off-payroll rules are still keeping thousands of highly skilled individuals out of work. It's staggering that the Chancellor is happy for this to continue at a time when economic inactivity is one of his biggest concerns.

'Our findings show that contractors want to prioritise clients who are willing to hire them on a freelance basis, and happy to walk away from those who won't – even if this means not working at all.

'The blame for this impasse doesn't rest with clients – it rests with the culture of fear that is propagated by the IR35 rules. This is a damning legacy for a Chancellor who claims to be on the side of business.'

The Public Accounts Committee (PAC) has challenged HMRC on the governance and accountability of the Making Tax Digital (MTD) initiative.

MPs in the PAC have called for HMRC to reconsider its response to the PAC's concerns regarding MTD. Writing to HMRC's Managing Director, Jim Harra, Meg Hillier, Chair of the PAC, requested additional information on how HMRC intends to address MTD issues highlighted in the PAC's report on the initiative, which was published in November 2023.

Ms Hillier called for HMRC to outline what it is doing differently to ensure MTD processes work more effectively than they have in the past. The PAC has also urged HMRC to carry out a 'robust assessment' of how frequent submissions of self assessment information and digital submissions will affect HMRC's tax revenue.

In the letter, Ms Hillier commented: 'You have not attempted to demonstrate consideration of further robust testing of the financial information underpinning your programme, for example, controlled behavioural experiments to ascertain the difference that more regular filing can make to the accuracy of returns. VAT returns were already provided quarterly and cannot provide this assurance.'

HMRC said that it intends to 'ensure that it strikes the right balance between ensuring competition, quality and access to software for its MTD for VAT and self-assessment customers'.

Accessing finance is becoming more difficult for a large number of small and medium-sized enterprises (SMEs), according to new data from the British Chambers of Commerce (BCC).

The BCC's latest survey of business conditions found that around half of businesses felt that getting funding had become more challenging over the past three years. By contrast, only 13% said it was getting easier.

The survey also reveals that 70% of firms – mainly SMEs – have not accessed finance from an external provider in the past 12 months.

Jonny Haseldine, Policy Manager at the BCC, said: 'As SMEs across the UK continue to deal with ongoing economic pressures, accessing crucial finance is really tough. For many SMEs it's a hurdle too large to even try and tackle.

'In evidence to the Treasury Select Committee last September, we called for urgent action to help SMEs seeking finance. We need to see measures to improve accessibility to finance, better awareness of alternative funding options and greater competition in banking options.

'SMEs are the backbone of the UK economy. Giving firms easier and more competitive access to finance is crucial to getting the economic growth we all want to see.' 

Think tank Localis has urged the government to reform Landfill Tax to help cut down on waste crime and illegal activity by organised gangs.

Localis argued that the gap between standard levels of Landfill Tax and lower levels has led to an escalation in waste crime, including fly tipping and illegal dumping.

It said that the costs of waste crime have 'burgeoned' by 55% since 2015 to around £1 billion a year. The think tank recommends introducing a tax band to bridge the gap between standard and lower Landfill Tax rates, 'reducing the incentive for misclassification of waste and promoting fairer taxation'.

Jonathan Werran, Chief Executive of Localis, said: 'Waste crime is toxic in that it despoils our natural environment, imposes costs on already cash-strapped councils and robs the Treasury of tax revenue.

'Any serious attempt at place-based reform must look to addressing the iniquities and imbalances of how we tax it and then move to rigorous enforcement and prosecution of organised gangs.'