US threatens tariffs on UK goods over digital services tax

The United States has threatened the UK with tariffs of up to 25% on a slew of goods in retaliation for the digital services tax. Brought in last April it levies at 2% the revenues of search engines, social media services and online marketplaces which derive value from UK users. Ceramics, make-up, overcoats, games consoles and furniture could all be hit, according to a list published by the Biden administration. A UK Government spokesperson said: “Like many countries around the world, we want to make sure tech firms pay their fair share of tax. Our digital services tax is reasonable, proportionate and non-discriminatory. It’s also temporary.” The FT reports that the UK international trade secretary, Liz Truss, has told the Biden administration to “desist” from its threat and instead engage in international efforts to agree a “fair” way to tax multinational tech companies.

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Further tax changes expected

Industry experts speculate on the possible tax changes that Chancellor Rishi Sunak could announce in the Autumn Budget. Eddie Grant, a Director at St. James’s Place, comments: “The Government has over the year commissioned a series of consultations so there was an expectation they would be the focus of the Tax Day announcements, in particular Inheritance Tax and Capital Gains Tax, but there was only minor changes. There were no announcements about pension tax relief despite it being widely speculated and no changes to Capital Gains Tax. Could these be planned for the Autumn Budget when we get the detail?”

Daily Express

Isle of Man offers tax cuts to lure new residents

New residents are being encouraged to move to the Isle of Man and buy property amid a skills shortage in the economy. The island’s campaign is highlighting no inheritance tax, no stamp duty, no masks and no social distancing as some of the perks to entice prospective residents.

The Daily Telegraph


UK bank lending leapt by £29.3bn since March

A new study by UHY Hacker Young shows UK banks have lent around £29.3bn more to businesses over the past year – a rise of 8% since the start of the pandemic. This compares with a 5.3% jump in lending in the EU on average. UK bank lending also surpassed Germany (7%) and Spain (3%). “We may have underperformed in some areas in our response to Covid but in terms of getting finance to businesses, this is an area where the UK has been a leader,” managing director of UHY Hacker Young Corporate Finance, Robert Kidson, said. “The economic impact of the pandemic and the disruption to businesses cash flows has lasted longer than anyone expected…there is little certainty on when businesses can return to ‘normal’ operating levels, the UK needs to provide as much support as possible to ensure businesses stay afloat until then.”

City AM


SMEs plan to increase investment in the year ahead

A report from Virgin Money reveals the annual growth rate in the number of registered companies in the UK surged to a record 8.3% in Q4 2020. More than a quarter of SMEs plan to invest more in their businesses in the year ahead than during a typical pre-pandemic year – with 35% intending to invest £10,000 to £10m this year, a rise on 32% from 2020. However, only one in five SMEs expect to be able to keep all furloughed employees after the end of the Coronavirus Job Retention Scheme, with over 50% of small firms currently employing staff on furlough. Group business director at Virgin Money, Gavin Opperman, commented: “While there are undoubtedly significant challenges ahead, many businesses remain optimistic and intend to invest for the future as the economy recovers.”

The Scotsman City AM

SMEs need help to drive productivity up

Researchers at NatWest have determined that boosting productivity among SMEs could add £140bn to the economy by 2030 – the equivalent of an extra 3.2m jobs. Figures show SME productivity in Britain lags the US by 17% and Germany by 12%. Andrew Harrison, NatWest head of business banking, said: “Support needs to be more closely tailored to their specific needs.”

The Times, Page: 40


Stamp duty holiday drives mortgage lending to five-year high

New Bank of England data show that the stamp duty holiday extension spurred home buyers to borrow £6.2bn last month – a five-year high for mortgage lending. Some 87,700 mortgages were approved in February, down from more than 100,000 in November and December, but still one of the highest numbers since 2007. “We suspect that mortgage lending will remain high this year given the extension to the stamp duty holiday and the strength of the survey data,” said Andrew Wishart at Capital Economics. “As a result, mortgage approvals for house purchase are likely to reach their highest level since 2007 this year.”

The Daily Telegraph City AM


Defined contributions increase in Q4 2020

New ONS data reveals defined contribution (DC) pension contributions have returned to pre-COVID levels, with employee contributions up 12% in the three months to September 2020 to £1.8bn. Employer contributions to DC schemes jumped 7% to £4bn in the third quarter of 2020, up from £3.7bn in the previous quarter. AJ Bell’s Tom Selby said: “It is hugely encouraging that, after a dip in both employee and employer pension contributions at the start of the pandemic, the amount savers are saving for retirement has quickly bounced back.”

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Shell director’s pay could be linked to climate action

Shell has suggested that its director’s pay could be linked to the group’s climate performance, following a similar announcement from BP last week when its shareholders were told to vote against a climate resolution that would demand the firm’s decarbonisation plans are aligned more closely with the 2015 Paris agreement. This comes ahead of a Shell shareholder vote on the issue in May.

City AM


Optimism about household finances rises

The Scottish Widows Household Finance Index rose from 41.1 to 42 in the first three months of the year, encouraged by the success of the vaccination programme and the “road map” out of lockdown. The survey, conducted with IHS Markit, found people are feeling the most secure in their jobs since the start of the pandemic and have paid off debts at the fastest rate in more than a decade.

The Times


Council work defended by auditor

Grant Thornton ’s audit work on Liverpool Council has been defended by the firm. After Liberal Democrat councillor Andrew Makinson said last week: “The taxpayers of Liverpool have been paying £191,000 to Grant Thornton to provide assurances that the city’s accounts are in order. While you’ve not been able to fully certify them… you have repeatedly provided value for money assurances and various concerns raised by opposition councillors have been rather dismissed by yourselves.” The company’s director Andrew Smith responded: “We are confident in the work we’ve done in those areas… There are very serious best value issues in there but there is a limit to what we can do around that in terms of the requirements of the value for money work.”

City AM

Contact Paul Southward

Paul Southward