NEWS – WEDNESDAY 3RD MARCH 2021
NEWS – WEDNESDAY 3RD MARCH 2021
Later today The Chancellor Rishi Sunak will deliver his much anticipated second Budget. With pressures to kickstart the economy and deliver further support during this unprecedented time of crisis, there is a lot resting upon the Chancellor’s shoulders. Visit the ksk.co.uk website later today for initial reports on the announcements made and later this week for further analysis of the impact of the measures introduced. Contact Paul Southward or your usual KSK contact for further information.
Speculation has been rife as you may expect, rather than add to that at this late stage, here is what we do know:
Van and Fuel Benefit Charges
The van benefit charge and the fuel benefit charges for cars and vans will be uprated from 6 April 2021.
- Van Benefit increased to £3,500 (from £3,490)
- Car fuel benefit charge multiplier will increase to £24,600 (from £24,500)
- Van fuel benefit charge will increase to £669 (from £666)
NIC rates and thresholds for 2020/2021
Statutory Instrument 2021/157, set out the rates and thresholds from 6 April 2021, Here
TAX NEWS – WEDNESDAY 3RD MARCH 2021
Budget set to deliver modest tax reform
The I says today’s Budget is likely to deliver modest increases in taxation, with an increase in corporation tax and freeze to the thresholds at which people pay the basic and higher rate of income tax expected to be outlined by the Chancellor. It adds that further changes to taxation will come on March 23, with the Treasury set to announce a number of consultations on potential reforms. Among proposals likely to be detailed on what has been dubbed ‘tax’ day’ are a levy on online retailers and an increase to the level of national insurance contributions paid by the self-employed. The Telegraph looks at how Rishi Sunak might raise revenue without breaking the “triple tax lock” manifesto promise, saying he could tweak thresholds. EY’s Chris Sanger says the Chancellor has “many options if he’s looking to raise revenue in the future without changing the headline rate”;. Meanwhile, BBC News says that while Conservative backbenchers are strongly opposed to tax rises, former party leader Lord Hague has said “personal and business” taxes must rise to help Government finances. Elsewhere, a Telegraph editorial says the Chancellor may see an economic boom once pandemic restrictions are lifted, “provided he does nothing to hinder recovery”, adding that this means “resisting the pressure for tax increases” as he looks to balance the nation’s books. The FT says that while an Office for Budget Responsibility forecast is set to outline an improved outlook, Mr Sunak “will still warn that tax rises are coming.”
Kwarteng: Budget should focus on growth not tax
While the Chancellor is reportedly set to turn to tax increases as he looks to rebuild the Government’s finances, Business Secretary Kwasi Kwarteng says growing the economy is “the real key”. He told LBC that the “best remedy for the deficit, the best remedy for the economy is to open up the economy, allow people to get on with their lives, allow businesses to start trading again.” Mr Kwarteng said an efficient vaccine rollout and the Prime Minister’s roadmap out of restrictions remaining on track could mean “there’s every chance the economy can bounce back, we can see strong growth at the end of 2021.” He told LBC: “Obviously we have to balance the books over time, but I’m a low-tax Conservative”. Meanwhile, former Chancellor Lord Hammond warned Mr Sunak that immediate tax rises risked endangering any recovery, warning that as stronger economic growth is key, “we don’t want to choke that off”. Lord Lamont, another of Mr Sunak’s predecessors, said: “It wouldn’t be a good idea to have significant tax increases at this point”.
The Times, Page: 8 Daily Mail, Page: 4 The I, Page: 7
Chancellor warned over online sales tax
With Chancellor Rishi Sunak expected to launch a consultation on new levies for online retailers, Dom Hallas, executive director of start-up policy advocate Coadec, has warned that an online tax would unfairly penalise retailers and traders who have shifted online to adapt to coronavirus lockdowns. “If the Government wants to make life easier for retailers, kneecapping businesses who sell online isn’t the way to do it”, he argued. He added that an online sales tax would “unfairly punish small businesses pivoting successfully to new business models”. Helen Dickinson, chief executive of the British Retail Consortium, said that with the post-pandemic recovery set to be powered by consumer demand, “the Chancellor should ensure he doesn’t introduce any new taxes that stifle this”.
Sunak told higher taxes ‘are a form of austerity’
Matthew Lesh, head of research at the Adam Smith Institute, says that while the Chancellor is right to suggest Britain’s fiscal position is not sustainable amid a wave of pandemic-related spending, he is wrong to suggest tax increases are justified as the public is sick of austerity, saying: “Make no mistake: higher taxes are a form of austerity.” He reflects on reports that the corporate tax rate is set to climb from 19% to 25% by 2024, saying the increase could be “particularly damaging if it is not accompanied by a more generous system of capital allowances.” He adds that freezing income tax bands will effectively break a manifesto promise to not increase income taxes.
Gauke: Corporate tax hike could deter investment
Former Justice Secretary David Gauke says the Chancellor will need to raise taxes if he wants to address the national debt burden, although the economic consensus is that Rishi Sunak does not need to raise taxes in aggregate now. This, Mr Gauke says, “is sensible given that the short term focus must be to support the economic recovery.” Looking at levies that can be tweaked, he notes a manifesto pledge that income tax, national insurance contributions and VAT will remain untouched, saying this leaves business taxes, especially corporation tax, to be raised, arguing that higher rates could make it harder to attract business investment.
EMPLOYMENT NEWS – WEDNESDAY 3RD MARCH 2021
Furlough scheme to be extended
The Government will today announce it is extending the furlough scheme until the end of September, with Chancellor Rishi Sunak saying the move will help millions through “the challenging months ahead”. The extension means furloughed employees will continue to receive 80% of current salary, capped at £2,500 a month. Employers will be asked for a contribution of 10% from July and 20% in August and September. Access to grants will also be widened, making 600,000 more self-employed people eligible for Government help. The CBI said extending the furlough scheme will “give businesses the chance to catch their breath as we carefully exit lockdown”, with chief economist Rain Newton-Smith welcoming increased support for the newly self-employed. Mike Cherry, chairman of the Federation of Small Businesses, said extending support measures over the summer – a period that will hopefully “bear the first green shoots of recovery” – will enable firms to plan ahead.
PROPERTY NEWS – WEDNESDAY 3RD MARCH 2021
House prices up 6.9% in February
Figures from Nationwide show that average UK house prices grew 6.9% year-on-year in February, up from the 6.4% growth recorded in January. The average price hit a record £231,068 last month, with this marking a 0.7% month-on-month increase following a 0.2% dip in January. Nationwide’s chief economist Robert Gardner said the increase seen in February was a surprise, with growth having been expected to soften as the end of the stamp duty holiday neared. He said the stamp duty holiday may still be providing “some forward momentum” and suggested further policy support in the Budget could further boost activity. Noting that the outlook for the housing market is “unusually uncertain”, Mr Gardner said that “if labour market conditions weaken as most analysts expect, it is likely that the housing market will slow in the months ahead”.
The Daily Telegraph, Business, Page: 4 The Guardian Evening Standard BBC News
CORPORATE NEWS – WEDNESDAY 3RD MARCH 2021
Boohoo could see US import ban
Boohoo could face a ban on importing goods to the US following allegations of slave labour at some of the fashion retailer’s suppliers. Duncan Jepson, a lawyer who runs campaign group Liberty Shared, says there is “compelling” evidence of labour abuses at companies selling goods to Boohoo. An independent review last year concluded that Boohoo’s senior directors knew “of “serious issues” with the treatment of workers in the company’s Leicester factories. It is noted that the investigation prompted auditor PwC to terminate its relationship with the fast fashion firm.
The Independent, Page: 48
Trying times for Saracens
Rugby club Saracens could cease to exist if they do not return to the Premiership this season, with the club’s accountants Moore Kingston Smith warning that failure to achieve promotion would create “material uncertainty” over the club’s future.
The I, Page: 48
ECONOMY NEWS – WEDNESDAY 3RD MARCH 2021
Freeports ‘no magic bullet’ for the economy
A report from think-tank UK in a Changing Europe says freeports are unlikely to offer a “magic bullet” for boosting the UK’s economy, suggesting that the main beneficiaries from the initiative will be the businesses and super-rich individuals who take advantage of the tax breaks they offer. The report says freeports are likely to relocate activity and jobs rather than creating them, with deputy director and report co-author Catherine Barnard saying suggestions that the initiative is going to transform the wealth and prosperity of the country are “simply untrue”. She adds that freeports will help the regions that get them “but possibly to the detriment of those that don’t.”
Contact Paul Southward