Falling on the 15th March, the ‘Ides of March’ was traditionally a date in the Roman Calendar for the ‘settling of debts’ and of course the fateful assassination of Julius Caesar!
Not quite as eventful as the assassination of Caesar, but nevertheless a date worth watching this month is the 23rd March. This is because behind all the Chancellor’s political chutzpah of his Spring Budget which aimed to keep the economy on life support and plan some ways of clawing it back; the 23rd March is the day when we will get a real sense of what the Treasury is planning to hit us with next!
So what do we know already? Well the Chancellor’s plan to increase corporation tax from its current rate of 19% to 25% from 2023 onwards is well documented, as is the Chancellor’s plan to freeze tax thresholds and inheritance tax, in order to push more people into those higher tax brackets. This is remarkable in itself, making it the largest tax-raising budget since 1993 under Norman Lamont, involving £12bn increase in corporation tax and £9bn of personal tax rises.
What we don’t know yet however, is the full extent of the documents and consultations that would have been traditionally published on Budget day, but this year will be published on 23rd March dubbed as UK “tax day”.
This day long awaited by financial experts three weeks after the Budget will be a real indicator for the long-term changes in Government tax policy, including for example future changes to capital gains tax. Tax professionals say this break from tradition could also give the Chancellor an opportunity to signal his intent on further big tax changes to come – including potential tax rises in the future – outside the crowded time of Budget day.
The Chancellor will in effect on 23rd March set the agenda for the autumn; signalling what is going to come.
A lot of criticism was levelled at the Budget for not doing enough around green growth and taxation. The 23rd March could be the perfect time to announce consultations on how to tax carbon while creating incentives for green energy innovation. The UK will be hosting the UN Cop26 international climate talks in November, perfect for around the time of the Autumn Statement.
It’s worth noting that publishing tax consultations after the Budget would also buy the Government time to assess the public’s appetite for possible changes. The three-week window may allow the Government to gauge the public’s reaction to the high-level measures and potentially change the amount of those consultations. Experts predict that as many as 30 new revenue raising measures could be published by the Treasury.
Pending what is published, the general reaction to the Budget has been positive to the Government. Business has reacted pretty favourably so far and a You Gov poll published after the Budget gave the Conservatives a 13-point lead over Labour. The combination of the continued success of the vaccine programme; the well-received spending plans and the easing of lockdown restrictions is likely to lead to a ‘strong’ Conservative showing in the May local elections according to pollsters. This is not such good news for Labour leader Keir Starmer; with one senior policy member describing the outlook as “grim” and warning that matters are likely to worsen for the labour leadership over the summer. We will see.
What we do know is that the Chancellor is politically playing a game of two halves. Despite the early warnings to “level with the people” and embark on a programme of tax rises to repair the public finances. This was expectation management. The Budget on the 3rd March was laced with sugar. The nastier stuff has been pushed back by at least two years.
However, we won’t know until 23rd March how much nastier it will be, so “Beware the Ides of March”.
Further political analysis post-Budget will be provided by Alex Challoner, Managing Director, on 18th March with CBI panel as Cavendish Advocacy becomes a sponsor, along with YouGov, of the Government Affairs Network of the CBI. Find out more here.