NEWS – TUESDAY 16TH MARCH 2021
NEWS – TUESDAY 16TH MARCH 2021
TAX NEWS – TUESDAY 16TH MARCH 2021
IR35 change to affect 170k contractors
The IR35 reform set to be rolled out next month could see around 170,000 self-employed workers forced to pay more tax. The Government says that the change will only apply to medium and large-sized businesses, meaning genuine freelancers and self-employed workers will not be affected by a shift that sees business take responsibility for deciding on a person’s tax status. The Express highlights research by the Association of Independent Professionals and the Self-Employed which shows that half of freelancers are planning to stop contracting in the UK after IR35 changes come into effect. The proportion is up from nearly a third the same time last year, when the legislation was originally due to come into force.
The Sun Daily Express
Cross-border workers call for tax law rethink
People who live in the Republic of Ireland but work in Northern Ireland are calling for changes to remote-working tax laws, with the current system seeing them have to pay tax in both states. While they can claim relief against tax already paid in Northern Ireland on their salary, the work must be conducted outside the Republic, meaning they cannot work from home.
CORPORATE NEWS – TUESDAY 16TH MARCH 2021
IMF: Pandemic increases dominance of big firms
The International Monetary Fund says large companies have increased their dominance over the world’s advanced economies, with their concentration of revenues climbing during the pandemic. It attributed this in part to a rise in bankruptcies, which hit smaller companies hardest, and warned that the increase in dominance by larger firms could stifle growth. The report said: “We know from experience and IMF research that excessive market power in the hands of a few firms can be a drag on medium-term growth, stifling innovation and holding back investment.” It added that such an outcome “could undermine the recovery” and “block the rise of many emerging firms at a time when their dynamism is desperately needed.”
Business optimism increases
A new Accenture/IHS Markit survey has shown that business optimism in the UK is at a six-year high. The poll of 12,000 manufacturing and service companies saw 68% say they expect activity to increase in 2021, while only 11% foresee a decline. The net balance of +57% represents a steep increase on the +34% reading recorded in October. Rachel Barton, strategy and consulting lead at Accenture, said that it was “encouraging” to see businesses confident about bouncing back, commenting: “Although we are not out of the woods yet, it is important for UK business to take advantage of this confidence in order to build a sustainable recovery”.
Boost for manufacturing growth forecast
A survey by Make UK and BDO has shown strong growth plans among Britain’s manufacturers, with the sector expected to see growth of 3.9% in 2021. This marks an increase on a previous estimate of 2.7%. The survey also shows that the industry faced a 10% drop in output in 2020. ?
Law firm mergers drop to nine-year low
Law firm mergers have fallen to a nine-year low, as the economic downturn brought about by the coronavirus pandemic has left consolidator firms wary of making acquisitions. Data from Hazlewoods reveals that 107 law firm mergers were completed in 2020, down 25% on the 143 mergers that occurred in 2019 and less than half the 278 mergers that took place in 2011.
UK start-ups attract record $8bn in dash for growth
Tech Nation data shows UK tech sector attracted record investment of close to $8bn in Q1, with investment in fast-growing companies more than twice that seen in Q1 2020.
EMPLOYMENT NEWS – TUESDAY 16TH MARCH 2021
Bailey expects lower jobless peak
Bank of England governor Andrew Bailey has said unemployment is likely to peak at a lower level than previous estimates, with the Chancellor’s decision to extend furlough until September likely to limit the effect of the pandemic on jobs. Mr Bailey told BBC Radio 4’s Today programme: “I think it’s very helpful that the furlough scheme is now projected to extend beyond the end of the restrictions by a month or two, which should help to smooth that transition.” He warned, however, that “expecting a transition without some rise in unemployment I’m afraid is, is probably unlikely.” While the Bank’s most recent forecasts, which were made before the furlough scheme was extended, put the peak in unemployment at 7.5%, Mr Bailey said: “I would expect the next forecast to show the peak in unemployment will be lower.”
FINANCIAL SERVICES NEWS – TUESDAY 16TH MARCH 2021
Khan calls for financial services clarity
Mayor of London Sadiq Khan has called for the Government to provide greater clarity for the City of London post-Brexit, urging Chancellor Rishi Sunak to “address the concerns of London’s financial and professional services sector”. Mr Khan has called on ministers to secure equivalence for the financial services sector, saying this will “ensure a fair and level playing field.” He cited research from the Centre for Economics and Business Research which suggests the UK could lose £2bn of GDP each year from a smaller financial services sector post-Brexit. Mr Khan also warned that it is “essential that the Government’s immigration policy maintains and broadens the pool of international talent that industry can access.”
PERSONAL FINANCE NEWS – TUESDAY 16TH MARCH 2021
Three-quarters of millennials seek advice
A poll of 1,000 people by Prudential found that 74% of millennials and 58% of Generation Z have seen, or are going to see, a financial adviser, with this driven by financial difficulty and a desire to start investing. It also found that 32% of Generation X, 21% of Baby Boomers and 24% of those aged over 75 said the pandemic had specifically driven them to seek advice. The research also found that 53% of adults said the financial crisis caused by the pandemic had prompted them to seek advice from a financial adviser, with 33% of those having already sought financial advice and 20% planning to do so.
INTERNATIONAL NEWS – TUESDAY 16TH MARCH 2021
Biden plots major tax rise
President Joe Biden is reportedly considering the first federal tax hike since 1993 as he looks to reboot the US economy. Plans said to be under consideration include raising corporation tax from 21% to 28%, increasing income tax on those earning over $400,000, making the estate tax more stringent and increasing capital gains tax on those making more than $1m. The moves would help fund a long-term economic plan focused on infrastructure, climate and education.
The Independent Daily Mail The Daily Telegraph
ECONOMY NEWS – TUESDAY 16TH MARCH 2021
Bailey: recovery may be quicker than forecast
Andrew Bailey, governor of the Bank of England, says the vaccine programme could see the economy outdo expectations in the coming months. However, he added that while he now saw “upside risks” to the Bank’s growth forecasts, new COVID-19 variants may still derail the recovery. Asked what sort of recovery the UK could expect, he told BBC Radio 4’s Today programme: “I’m now more positive, but with a large dose of caution.” His comments came as a monthly Ipsos Mori poll suggested public optimism over the UK’s economic outlook is at its highest since 2015. The survey saw 43% of respondents say they thought the economy would improve over the next 12 months, compared with 41% who thought the opposite. This lifted the economic optimism index to +2, up from -31 in February.
ONS updates inflation shopping basket
The Office for National Statistics’ (ONS) inflation shopping basket has been updated to reflect the impact of the coronavirus pandemic, with the statistics watchdog adding items such as hand sanitiser and home workout equipment to the list. With the pandemic driving an increase in remote working, casual clothing has been added to the basket as demand for formal office wear has declined. While smart watches, internet controlled light bulbs and electric hybrid cars are to join the price index, ground coffee and white chocolate are among items being removed from the list. Overall, the ONS has added 17 items in 2021, removing 10 and leaving 729 unchanged.
Contact Paul Southward