Director's update: tax and regulation

It’s finally happened. While it may have felt like quite the build-up to the joint Autumn Budget and CSR, the event came and went in a somewhat muted way.

The tone and ambition from government was positive for businesses, but the Budget and CSR missed the opportunity to deliver bolder measures to stimulate high investment, productivity, and the transition to net zero.

And while the CBI achieved important wins regarding short-term measures for Business Rates, a reduction in the Banking Surcharge, a commitment to R&D spending and expansion of R&D tax credits among others, our eyes remain firmly fixed on the next fiscal event. And what the government must provide to deliver its ambitions for a high growth and high skilled UK economy – including further reform for business rates.

You can read more about the CBI’s reaction to the Budget in our summary documents on what was and wasn’t delivered across policy areas – including innovation, skills, levelling-up, decarbonisation and more.

As I’ve mentioned above, the CBI is already looking at what could come next, whether in the shape of a Spring fiscal event, or a 2022 Autumn Budget. In preparation, we will be consulting members on their views of this Budget and what is required next year through our Q4 Regional Councils, January member Virtual Rooms, Finance Director Network, Business Rates Working Group and Tax groups. For more information on how to get involved in Budget 2022 consultation and discussions, or to arrange a 1-2-1 meeting with our Economic Policy team, please contact Katy Recina, Principal Policy Adviser for Economic Policy.

Tax doesn’t have to be taxing!

There were a few new announcements in the Budget regarding tax and you can read our analysis here, and our dedicated Business Rates and Online Sales Tax update here.

In addition, it was announced that there will be a Tax Administration and Maintenance Day to be held later this year (exact date to be announced).

At this stage, we do not expect the government to announce any significant policy decisions but there will be further information on some of the Budget announcements, most notably the publication of the summary of responses to HMT’s R&D Tax Review consultation. We understand from our discussions with Treasury that what was announced at Budget was not the end of the road on R&D tax reform. So, we look forward to continuing to discuss CBI asks and ensuring the UK’s R&D tax credit remains globally competitive and aligned with modern R&D practices. This includes a 'green' uplift to help unlock private sector investment to reach net zero and the inclusion of capital expenditure.

It has also been confirmed that we are not likely to see the Online Sales Tax consultation (announced at Budget) on this day. We’ll have to wait until the New Year for this one.

Shaping the competition and regulatory landscape

UK Government’s Green Finance Roadmap

The CBI has played an active role in shaping the UK’s Greening Finance Roadmap. We shared member concerns directly with HMT and BEIS on sustainable finance, while pushing for clarity and simplification of regulatory framework.

Building on the publication of the CBI’s Sustainable Finance Paper, the government’s roadmap managed these concerns and the need for usable sustainability disclosures and metrics, as well as the importance of international alignment. And it was great to see the City Minister, John Glen MP get behind the CBI’s sustainable finance paper at COP26, where he said “the CBI’s excellent Sustainable Finance position paper is a clear illustration of [a] collaborative approach. It sets out what you [business] need from us [government]”.

But our task here isn’t done. We will continue to work with members, government, and regulators as the representative business voice on the UK Green Technical advisory Group; developing the UK green taxonomy to classify economic activities and how they will be financed in the race to net zero. This work also includes our SME climate finance guide which provides actionable advice from UK Finance and the CBI on how SMEs can secure the right finance to achieve their ambitions for green growth.

The CBI also continues to work on the financial services regulatory review, with work ongoing on the UK Secondary Capital Raising Review and payments. The financial services team is now looking ahead to the launch of the next phase of HMT’s regulatory framework review.

For more information, please contact Chris Wilford, Head of Financial Services Policy.

International tax landscape

On Friday 8 October, the OECD announced a landmark package of international tax rules designed to address tax challenges arising from the digitalisation of the global economy – see the CBI’s summary here.

While the detail in the announcement was high level, the CBI’s tax policy team has been working with members to ensure their views are heard. This included a members’ roundtable discussion with Treasury and HMRC on 21 October. Publication of the final OECD rules and commentary are expected on 30 November and while we understand disappointingly that the OECD will not be consulting with stakeholders on the final rules, the CBI will continue work with members and business at the OECD (following its publication) to ensure those issues most critical to UK business are heard – both on the model rules themselves and as the UK begins work on implementing them into UK tax law.