FSL Chain Mail (10th February 2021)

FSL’s Chain Mail is a regular blog containing links to news articles that we think are worth sharing.

This edition of Chain Mail examines the latest views of how Covid-19 might impact taxation in the upcoming March Budget.  Many believe that a hike in tax is inevitable and that CGT is most likely to see a rise in rates.  Though the general consensus is that personal taxes are unlikely to be affected while the country is still fighting the virus and the economy remains unstable.

The Chancellor recently announced that he will uphold the Conservative election promise to not raise rates for income tax, national insurance and VAT.  This article from the FT explains how his hands are tied by the Tory ‘triple tax lock’.  Though this opinion piece from Martin Wolf of the FT urges the government to reform the UK’s dysfunctional tax system stating that “the UK must consider its fiscal priorities and its tax system, strategically”.

Furthermore, FT Adviser reports on an Institute of Fiscal Studies paper on the UK’s tax system and the need to ‘sort out the mess of investment taxes’.

However, other speculation about the Chancellor’s intentions point towards corporation tax.  This City A.M. article quotes sources from government and The Times, suggesting that “the chancellor saw corporation tax as the most equitable way to raise revenues as it will only hit UK businesses who have made profits”.

Other areas for potential new tax income may come from online retailers.  This article from The Guardian advocates “ an online sales tax in response to an explosion in internet shopping, as the Covid-19 pandemic accelerates the closure of high street shops across the country”.

With only a few weeks till the Budget, we don’t have long to wait for the potential announcements.

Look out for our next edition with more FSL Chain Mail links.