#58 What Does the UK Budget 2021 Mean for You?

The Do More With Your Money panel give their reactions to Rishi Sunak’s UK Budget 2021, analysing what it means for markets, investors and economic recovery.

0:00 What's happening globally in markets? There's positive developments in the US as economic recovery continues to gather pace

10:25 A reason to raise a Whiskey in the US, and the return of Donald Trump to the political scene

11:51 The impact of increasing the UK Corporation Tax on businesses, how it affects us all and was this really an effective taxation?

18:40 A discussion on UK debt

23:36 The Budget from True Potential's point of view

28:25 Business is great at True Potential, with a strong start to 2021

30:11 David Harrison wrote the book on Freeports, literally. His reaction to seeing Freeports in the Budget and his analysis on other aspects of the Budget

42:10 David explains what a Freeport is and how Freeports can benefit the economy

48:14 A discussion on investment into the UK

50:51 Using tax allowances in your ISA before tax year end. Don't fall victim to Inflation!

1:01:56 The panel share some thoughts and laughs on the idea of moving the Treasury to Darlington

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[TruePotentialLLP]

What was your reaction to the UK Budget?

[ianpacker]

Two observations prompted by the podcast.

Firstly on corporation tax, Mr Sunak gave a carrot (an early lollipop - something that tastes nice but doesn't cost much in the next two years) in the form of the super deduction (excess capital allowances) before waving the stick in the form of deferred potentially higher corporation tax rates (more than two years away). Like Mr Harrison Senior, I view this as a political device whereby as the economy improves towards the next election (which I think it will), he will be able to row back from that 25% to say 22% or 23% before the general election. In terms of overall tax take, corp tax at 8% of all revenues is small beer and even if the 25% rate were to be realised, that only takes the 8% up by Mr Harrison Junior's quoted 30% to 10.4%. Mr Johnson (Neil not Boris) noted the extension of carrying back tax losses from the present one to three years. Let us remember that many businesses will have racked up significant losses during the pandemic which they can choose to utilise when they wish. So for the next two years they will be able to shelter some or all of their taxable profits they make by either carry forward of those tax losses or the super deduction or both. The former is much more flexible than the latter. As someone once wisely told me, tax is an overhead to be managed like any other overhead. Most businesses will be doing that.

Secondly on the level of the UK National Debt (quoted as circa 2 trillion or 2, 000 billion), many left wing commentators are still whingeing on about the 'years of austerity' post 2008/09 which brought down the level of that borrowing each year and indeed overall. Likening the UK's ability to borrow to having a credit card, if your limit is 2, 000 billion and you want to borrow more, you can either apply for a bigger limit or you can pay off a lot of what's on it to give you the headroom to borrow more back up to the limit. That's what Mr Osborne did and without that reduction, Dishy Rishi would not have found so easy to tap the market for the new borrowings he has had to do to support jobs and the business survival. The UK's credit rating is going to be crucial for weaning the economy off the life support it has received during the pandemic. The patient has to get out of bed and back on its feet. I only hope that many business owners now realise the hard truth that CASH IS KING and will husband their cashflow management accordingly going forward. With cash you can survive; without it life is a darn sight harder.


Many thanks Ian Packer