NEWS – MONDAY 1ST FEBRUARY 2021

NEWS ROUNDUP

TAX NEWS – MONDAY 1ST FEBRUARY 2021

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Tax burden is at highest since 1951

Office for Budget Responsibility data shows that the tax burden – the amount of tax taken by the Treasury compared with the size of the economy – is set to climb to 34.2% in the next financial year. Analysis by TaxPayers’ Alliance shows that, using a five-year average, the tax burden is already at its highest level since 1951. An increase could be driven by higher taxes reportedly being considered by Rishi Sunak, who is said to be mulling an increase in capital gains tax to bring it into line with income tax rates, with higher corporation tax also being considered. The mooted increases, which could be delivered in the March budget, come as the Chancellor looks to balance the books following the economic blow dealt by the coronavirus crisis. TaxPayers’ Alliance chief executive John O’Connell comments: “The sustained tax burden is now the highest it has been since the country was recovering from the Second World War 70 years ago, and any tax rises in the next Budget will put that figure even higher.” He urged the Chancellor to “give hard pressed families and businesses a respite from taxes.”

The Daily Telegraph, Business, Page: 1 Daily Mail, Page: 2

System shake up could fix tax

Writing in the Times, Paul Johnson, director of the Institute for Fiscal Studies, calls for reform of the tax system, saying that if tax rises are on the horizon, “we ought to start by sorting out some of the problems in the way the tax system works.” He warns of issues which create “complexity, inequity and the kinds of invitations to tax avoidance which politicians spend so much time bemoaning and so little time actually fixing.” Mr Johnson argues that many concerns stem from the fact the UK taxes “similar activities differently”, going on to suggest that as the system levies much lower tax rates on capital gains than on earned income, the difference “overwhelmingly benefits the wealthiest”.

The Times, Page: 37

Big tech and tax

James Moore in the Independent looks at how large tech firms have thrived amid the coronavirus crisis, arguing that firms known for “gaming of the international tax system and the pittance this has resulted in them paying” should contribute more to public finances hit by the pandemic. He suggests governments could look to impose a one-off increase in something like the UK’s digital services tax, adding that some are working on similar levies and argues they “could be co-opted for the purpose of imposing a pandemic windfall tax.”

The Independent

CORPORATE NEWS – MONDAY 1ST FEBRUARY 2021

Businesses in Brexit warning

Businesses are warning that issues the Prime Minister described as post-Brexit “teething problems” may well be indicative of disruption that will force many businesses to restructure and could see some close. A survey from Make UK, which represents manufacturers, shows that 60% of member companies that said the y were ready for Brexit “now experience disruption” and are “finding supply chains significantly impacted”. British Chambers of Commerce director general Adam Marshall said: “Nobody can be ready for a change of this magnitude. There needs to be a dynamic and continuous conversation on easements and simplifications”, while Mike Cherry of the Federation of Small Businesses has called on the government to issue “direct funding in the form of transition vouchers to aid operational adjustments”.

The Guardian

Victoria’s Secret claimed £2.4m through job retention scheme

An administrator’s progress report shows that Victoria’s Secret’s UK arm claimed £2.4m in taxpayers’ cash through the Government’s job retention scheme before it collapsed. It was also revealed that the retailer paid out £2.4m in fees to Deloitte, which was in charge of the administration process.

The Daily Telegraph, Business, Page: 1

Directors’ fear of fraud increases

A poll by BDO shows that three quarters of directors believe their company is more exposed to fraud than before the pandemic. It also found that a third experienced an increase in digital crime attempts in 2020.

The Daily Telegraph, Business, Page: 6

Too many boardrooms are climate incompetent

A recent Deloitte poll found that global executives rank climate change as the most serious societal threat to their business over the coming decade.

Financial Times, Page: 24

MSG owner plans London venue

The Madison Square Garden Company is hoping to build a new concert venue in London and is awaiting planning approval for the Sphere, a project that will sit close to the Olympic Park and house a venue that can hold 21,500 concertgoers. Analysis by EY suggests the economic benefits for local businesses will reach £50m a year once the venue is operational. It also forecast that the Sphere would contribute £2.7bn to the UK economy in its first 20 years.

The Guardian, Page: 30

PROPERTY NEWS – MONDAY 1ST FEBRUARY 2021

Sector groups call for stamp duty holiday extension

In a joint letter to Chancellor Rishi Sunak, property firms and trade bodies have called for the stamp duty holiday to be extended to help older vulnerable homeowners who cannot move during lockdown. Signatories including the Chartered Institute of Housing say a six-month extension of the stamp duty holiday could boost downsizing and free up housing supply. This comes ahead of a parliamentary debate on a petition calling for an extension to the stamp duty holiday. Commenting on calls for the March 31 cut-off to be pushed back, a Treasury spokesman said the “time limited nature” of the stamp duty cut “is what has encouraged people to take advantage of the scheme.”

The Daily Telegraph, Business, Page: 3

FINANCIAL SERVICES NEWS – MONDAY 1ST FEBRUARY 2021

Private equity transactions down in 2020

Analysis by KPMG shows that private equity firms completed 889 UK transactions in 2020, with these worth a combined £87.2bn. This marks a 26% dip on 2019’s total. Jonathan Boyers of KPMG commented: “Once the initial shock of lockdown had worn off, and after a number of years of hesitancy caused by Brexit, general elections and broader international uncertainty, we saw a renewed urgency amongst private equity investors to get deals done.” He added that there are no signs that the latest lockdown is “quelling momentum”, going on to suggest that concerns over capital gains tax changes could contribute to a rise in deal-making.

Daily Mail, Page: 75

ECONOMY NEWS – MONDAY 1ST FEBRUARY 2021

BSA chair warns BoE over negative rates

The Bank of England (BoE) has been warned that cutting the interest rate below zero may fail to boost the economy because lenders would increase mortgage costs in response. Mike Regnier, chairman of the Building Societies Association, said he fears negative rates “would have the opposite effect from supporting the economy”. He believes banks would not want to charge consumers negative interest, saying: “I can’t see a scenario where we’d charge our retail savers to leave their deposits with us”, but said they “would need to protect their net interest margins”, with this likely to mean lending rates would rise.

The Guardian

Bank to report on rate cut feasibility

The Bank of England will this week detail evidence collected from commercial banks about whether negative interest rates are operationally feasible. The Times says that the bank is expected to keep policy unchanged as it makes its latest monetary policy decision on Thursday, holding the base rate at 0.1% and opting not to expand its £895bn asset purchases programme. Howard Archer, chief economic adviser to the EY Item Club, said: “The Bank is more likely to look through the very challenging first quarter and focus more on the brighter prospects from the second quarter onwards.”

The Times, Page: 34 Daily Express, Page: 44

Consumer confidence climbs

An index compiled by YouGov and the Centre for Economics and Business Research shows that consumer confidence rose by 0.3 points to 102.9 last month, with any reading above 100 pointing to optimism. A sub-index for personal finances over the year ahead rose from 91.4 to 95.8, while the index for job security rose from 109.1 to 110.6. Meanwhile, a separate survey by Deloitte suggests consumer confidence dipped marginally to “near-record lows” in Q4, although it did say there is “cautious optimism” as robust disposable incomes help support confidence.

The Times, Page: 36

OTHER NEWS – MONDAY 1ST FEBRUARY 2021

Record number of supercars registered

Research from UHY Hacker Young shows that almost 16,000 supercars were registered at UK addresses in the year to December 2019, with the figures from the Driver and Vehicle Licensing Agency showing a 12% increase on the total registered in 2019.

The Guardian, Page: 27

Contact Paul Southward

Paul Southward