business news 24 September 2021

James Salmon, Operations Director.

The Bank of England holds rates and warns of inflation. Growth slows to weakest level since March. UK delays digital tax reforms and other business news.

The Bank of England holds rates and warns of inflation

The Bank of England mirrored the US FED as both edged toward tapering economic stimulus today with UKs The Monetary Policy Committee of the Bank of England voting by a majority of 7-2 to maintain quantitative easing at the current pace of £895 billion. Dave Ramsden and Michael Saunders cast dissenting votes to cut gilt QE to £840 billion. All 9 MPC members voted to keep interest rates unchanged at 0.10%.

Analysts are now predicting that rates will climb to 0.25% as soon as February. A further increase to 0.5% is possible later in the year. Ruth Gregory, of Capital Economics, said: “The MPC is getting closer to raising rates. Our hunch right now is that the second half of the year seems more likely. But the clear risk is that it happens earlier.”

UK Inflation is expected to rise above 4% by the end of the year, fuelled by rising energy costs, the Bank of England has warned. The Bank also said that there were signs the supply chain crisis was starting to hamper the economic recovery, and revised down its growth forecast for the third quarter by 1%. It came as the Bank’s Monetary Policy Committee held interest rates at 0.1%

Growth slows to weakest level since March
Britain’s economic growth has been brought to its lowest levels since pandemic restrictions were eased in March, according to the latest IHS Markit/Cips survey. Growth in private sector output slowed in August as firms struggled with severe shortages while costs rose at the fastest pace since the late 1990s. The flash composite purchasing managers’ index dropped to 54.1 in September from 54.8 in August. City economists had forecast a reading of 54.5. Chris Williamson, chief business economist at IHS Markit, said the data would “add to worries that the UK economy is heading towards a bout of ‘stagflation’, with growth continuing to trend lower while prices surge ever higher”.

UK delays digital tax reforms
The Government announced on Thursday that plans to make self-employed people and small businesses keep digital records and report their income to HMRC every quarter have been delayed for a year following pressure from professional bodies. Making Tax Digital for Income Tax will now be introduced in April 2024. Lucy Frazer, Financial Secretary to the Treasury, said: “The digital tax system we are building will be more efficient, make it easier for customers to get tax right, and bring wider benefits in increased productivity. But we recognise that, as we emerge from the pandemic, it’s critical that everyone has enough time to prepare for the change, which is why we’re giving people an extra year to do so. We remain firmly committed to Making Tax Digital and building a tax system fit for the 21stcentury.” General partnerships will not be required to join MTD for ITSA until the tax year beginning in April 2025, while the date other types of partnerships will be required to join will be confirmed in the future. Martin McTague, national vice-chairman at the Federation of Small Businesses, said: “This move will provide millions of sole traders with a measure of breathing space and some encouragement in a climate beset by spiralling energy costs, supply chain disruption and high levels of debt.”


Mitie upgraded its outlook on profit for the full year following a strong start to the year. The company increased its forecast for operating profit – before other items guidance – for FY22 to a range of £145 million to £155 million.

Begbies Traynor reports strong financial performance
Insolvency specialist Begbies Traynor Group reported another period of growth in revenue and adjusted profits in its latest trading update. The business recovery, financial advisory and property services consultancy recorded double-digit growth in the three months from May 1st and is on track to meet full-year expectations.

Self-employed pay a record £38bn in tax
Analysis of HMRC tax receipts by UHY Hacker Young shows the amount of income tax paid by self-assessment taxpayers has jumped 31% to hit a record £38bn in the past year, up from £29bn the previous year. Graham Boar, partner at UHY Hacker Young, said the increase in revenues is partly due to the self-employed having to pay tax bills that were deferred as part of the Government’s Covid support measures. “These figures show HMRC is starting to claw back the tax owed by self-assessment taxpayers. It appears we’ve passed peak leniency from HMRC,” Boar added. He goes on to advise that the self-employed who still find themselves unable to pay their tax bills should consider making use of Time to Pay arrangements. “This is where payments are staggered in instalments, usually over a 12-month period,” he explained.

UK tech sector now accounts for one in eight jobs
Tech and IT-related vacancies accounted for 13% of all advertised jobs in the UK in the first six months of the year, up from 12.3% a year earlier, according to figures from Adzuna. Analysis of the data by lobby group Tech Nation found that while tech salaries continue on an upward trajectory, the average salary for all jobs in the UK has decreased in 2021. Software developers are consistently the most in-demand from companies across the industry, with average salaries up 27% since 2018 to £50,000. “It’s been yet another record-breaking year for UK tech – and that means thousands of high-quality jobs for people across the entire country,” said Digital Secretary Nadine Dorries. “The jobs are there. We’re working tirelessly to make sure people who want to start careers and businesses in tech are supported with the skills they need to fill them, and to thrive.”

Employees abuse working from home
Andrew Monk, the chief executive of investment firm VSA Capital, has criticised government proposals for new staff to have the right to ask to work from home. He told the BBC that staff abuse flexible working, at least in financial services, and what these people really want is to work part-time on a full-time salary. VSA Capital, which employs about 20 people in the City of London, has pretty much all its staff back in the office, Monks told the BBC Radio 4 Today programme. “Obviously it varies from industry to industry, but in financial services it’s more important to be in the office because it’s a very live industry”. Commenting on the fact that some firms, such as PwC and Deloitte, have embraced flexible working, Mr Monk said audit work was taking longer as a result. He added that the time it takes for firms to set up a stock market flotation has jumped from three months on average to six.

NICs hike will inflict “terrible” toll on health and social care workers
NHS and care workers will be hit with a £900m tax bill following Boris Johnson’s increase in National Insurance Contributions, which were designed to fund improvements in social care and help the NHS recover following the pandemic. A report from the House of Commons library argues the tax hike will inflict a “terrible” financial toll on health and social care workers and their families. On average, 1.4m NHS staff will each have to fork out £315 more a year, the report says. Munira Wilson MP, the Liberal Democrats health spokesperson, said: “The Conservatives must rethink this unjust tax hike that will disproportionately impact those on low and middle incomes. Their plans risk worsening the staffing crisis in our care homes instead of fixing it.”

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