NEWS FOR THE WEEKEND TO 16TH FEBRUARY 2020
NEWS FOR THE WEEKEND TO 16TH FEBRUARY 2020
TAX NEWS FOR THE WEEKEND TO 16TH FEBRUARY 2020
Fiscal rule rethink could see tax cuts
The Telegraph reports that Boris Johnson is considering loosening former Chancellor Sajid Javid’s fiscal rules to allow for more spending and tax cuts to boost the economy. The paper points to speculation that new Chancellor Rishi Sunak’s Budget will see reform of VAT, stamp duty cuts for main homes and cuts to high street business rates. In an editorial, the Telegraph says that if fiscal rules do “become a little more elastic,” it would be “time to put tax cuts back on the table.” It adds that Britain’s tax code “is absurdly complex” and notes that cutting taxes has “historically led to higher revenues, because it attracts investment and encourages growth”. Elsewhere, the paper looks at what the new Chancellor’s Budget could hold, weighing his options in regard to issues such as pensions tax relief, stamp duty and income tax.
Sunak faces pressure to rethink rates
Ashley Armstrong and Louisa Clarence-Smith in the Times say that new Chancellor Rishi Sunak is under pressure to reform the business rates system. They look at calls for reform of rates from across the retail sector and note that Mr Sunak is “well versed in business rates” after being involved in a Treasury committee inquiry last year.
Millions unaware of marriage tax allowance
Millions of couples may be eligible for a £250 tax break for married couples and those in civil partnerships. While more than 1.78m already benefit from the Marriage Allowance boost, it is estimated more than 2m are missing out on the initiative which allows people with an income of £12,500 or less to transfer up to £1,250 of their Personal Allowance to their husband, wife or civil partner if their income is higher, reducing their tax by up to £250 for the 2020/21 tax year. Claims can be backdated four years to April 2015, but as of April 5 this year couples will only be able to claim back to 2016/2017.
Pensions tax relief: is time running out?
Claer Barrett in the FT looks at the possibility of the higher rate tax relief on pension contributions being scrapped and new Chancellor Rishi Sunak’s options in regard to the matter.
It is reasonable to ask the haves to contribute more
Resolution Group chairman Sir Clive Cowdery says reform of certain taxes is necessary to “address the intergenerational imbalance of wealth and opportunity”, suggesting more needs to be raised via wealth taxes.
Those generating jobs and wealth should be rewarded
WeFlex CEO Nicko Williamson believes hitting entrepreneurs’ tax relief “is a mistake”, saying the 10% rate is “part of the pot of gold at the end of the rainbow” for a “difficult career choice”.
Helen Jones, a tax partner at BDO, advises a Times reader who is looking to pass a property to their son at below market value, offering guidance in regard to capital gains tax and inheritance tax.
The Times, Page: 67
PM vetoes mansion tax
Boris Johnson has scrapped plans to impose a “mansion tax” on owners of expensive homes, with the Prime Minister said to have shelved the idea of including a new “high value property tax” in next month’s Budget after a backlash among Conservative MPs. A source has told the Sunday Telegraph that the proposals, which the PM had discussed with former Chancellor Sajid Javid, are now “highly unlikely” to feature in new Chancellor Rishi Sunak’s Budget. The paper says the plans had been mooted among a list of possible “revenue raisers”, with other options including expanding the scope of inheritance tax to cover business assets and cuts to pension tax relief. Writing in the Sunday Telegraph, former Chancellor Lord Lamont comments: “Conservative supporters were horrified by the kite-flying of swingeing tax increases including a mansion tax. The UK’s tax burden is already near a historically high level.” An editorial in the same paper backs the decision not to press ahead with a mansion tax, saying it would have been “a disastrous and divisive move”. Elsewhere, Carol Lewis in the Sunday Times looks at the potential implications a mansion tax could have, noting it was first suggested by the Liberal Democrats in 2009, while Labour proposed such a levy in 2014. She offers that many commentators believe that “the time is ripe” for a wholesale review of property taxes.
The Sunday Telegraph, Page: 1 The Sunday Telegraph, Page: 21 The Sunday Times, Home, Page: 6
EU demands tax control
Boris Johnson has reportedly rejected the EU’s stipulations for a post-Brexit trade deal, with a draft mandate from Brussels insisting it should retain control over British tax rules and state subsidies. The Mail on Sunday cites a source who says the EU wants the UK to comply with their tax standards and participate in their cross-border tax planning arrangements. A Government source told the Sunday Express: “This is ridiculous when many of the UK’s tax standards exceed those set out in the EU’s Anti-Tax Avoidance Directive.” It is reported that David Frost, the Prime Minister’s chief Brexit negotiator, will today warn that the demands far outstrip terms the EU has struck with countries such as Canada, Japan and Korea. A source said: “We are not asking for a special, bespoke or unique deal – just the same requirements that the EU has agreed with other like-minded countries.”
The Sunday Telegraph, Page: 8 The Mail on Sunday The Sun on Sunday, Page: 8 Sunday Express, Page: 8
Chancellor to target insurance tax loophole?
Dan Atkinson in the Mail on Sunday suggests that new Chancellor Rishi Sunak may use his first Budget to close insurance tax loopholes which be costing the Treasury more than £340m a year. Insurers are supposed to add 12% tax to the premiums they charge customers for certain policies but a 2019 report from HMRC shows some were failing to report all of their taxable premiums. HMRC is also worried about insurers operating in the UK but located overseas for tax purposes in jurisdictions “which can lack transparency”.
The Mail on Sunday, Page: 104
Rishi’s rules may see tax rethink
The Sunday Times’ David Smith considers the fiscal rules that new Chancellor Rishi Sunak may seek to set out, noting that it has been suggested tax increases might be needed, prompting speculation about reductions in pension tax relief and a wealth tax. Elsewhere, Geoff Ho in the Sunday Express says there are issues which “require immediate action” from Mr Sunak, most notably business rates. Mr Ho says the rates are a “calamitous tax which is helping to kill off Britain’s high streets.” Meanwhile, the Sunday Telegraph’s Jeremy Warner asks whether Boris Johnson’s Government is a “tax-cutting or big-spending administration,” saying the PM “cannot credibly spend a lot more and slash taxes at the same time.”
The Sunday Times, Page: 13 Sunday Express, Page: 44 The Sunday Telegraph, Business and Money, Page: 2
PROPERTY NEWS FOR THE WEEKEND TO 16TH FEBRUARY 2020
HMRC scheme reclaims £44.7m in tax from landlords
Figures from HMRC show that an increasing number of landlords are being found to have underpaid tax. The data shows that 11,129 landlords underpaid or paid no income tax in 2019, compared with 8,704 in 2018. HMRC reclaimed £44.7m in tax from landlords last year, a rise of 36% from the £32.8m collected in 2018. This comes as part of a scheme launched in 2013 which targets property investors who underpay tax on rental income. It was due to run for 18 months but has been extended indefinitely.
The Daily Telegraph, Money, Page: 5
Average home value expected to rise 3%
Economists forecast that the value of the average home is expected to rise by 3% over the next year. While the London market is expected to remain subdued, some regions could see property prices climb by 4%. The EY Item Club, which uses the Treasury’s own economic computer model, has raised its forecast for house price growth from 2% to 3%, with its chief economist Howard Archer saying: “There is pretty compelling evidence that there has been a pick-up.”
The Mail on Sunday
BTL blow as tax break bows out
With the scrapping of tax relief on mortgage interest payments coming into force in April, Sarah Bridge in the Mail on Sunday suggests it will prompt a sell off as the loss of the tax break “will be the final straw for many landlords as the financial mathematics no longer work.” John Stewart, policy manager for the Residential Landlords Association, says: “All the evidence shows that growing numbers of landlords are looking to sell properties as a result of the increased tax burden on the sector.”
The Mail on Sunday, Page: 106
CORPORATE NEWS FOR THE WEEKEND TO 16TH FEBRUARY 2020
Shoe Zone boss: Rates putting stores at risk
Shoe Zone CEO Anthony Smith says that the retailer could shut 100 stores unless there are urgent changes to business rates, saying a fifth of its outlets could close as the Government’s rating system is in “total turmoil”. This comes after Chris Wootton, CFO of Frasers Group, recently said ministers “need to do something now; not next month, not next year, right now” in regard to the system, while Mike Coupe, the outgoing chief executive of Sainsbury’s, has warned: “Taxation is completely out of step with the way the industry and customer shopping patterns have changed.”
Bury owner defaults on payments
Bury Football Club owner Steve Dale has defaulted on the CVA he agreed to settle the club’s £5m debts last year. It is now likely that the club will go into liquidation. Steven Wiseglass, a director at the insolvency firm Inquesta, said: “The CVA has formally defaulted and we will now be looking at taking the necessary action to deal with the default.”
The Guardian, Sport, Page: 8
Owners expected to inject cash to save Laura Ashley
Laura Ashley could be at risk as the retailer’s owners look to an emergency cash injection after a dispute with its lender. The chain has been in talks with American bank Wells Fargo, which has drafted in restructuring experts from Deloitte, over access to a £20m funding line designed to keep the fashion and homeware retailer afloat. Laura Ashley, which is being advised by PwC, secured the asset backed loan in October 2019 but a source said the firm has a cashflow problem as it does not have the assets to generate the availability of the funding required. Malaysian conglomerate MUI Group and its owner, Khoo Kay Peng, which together hold 51% of Laura Ashley, are expected to inject about £10m of emergency liquidity to keep it trading.
Amey breakup begins
Heathrow airport owner Ferrovial has reportedly set the wheels in motion for the breakup of outsourcer Amey, with marketing documents for the company’s drain cleaning and smart metering arm, as well as its recycling division, shared with prospective bidders by PwC.
The Sunday Telegraph, Business and Money, Page: 3
PERSONAL FINANCE NEWS FOR THE WEEKEND TO 16TH FEBRUARY 2020
Byers on bonuses
David Byers in the Times considers the unexpected issues a bonus can bring, noting that in some cases it can push the recipient into a different tax bracket.
INTERNATIONAL NEWS FOR THE WEEKEND TO 16TH FEBRUARY 2020
Italy hopes to lure UK pensioners with tax rate
Italy is lowering taxes in an effort to draw pensioners to its southern villages as it looks to overtake Portugal as the preferred retirement destination. While Portugal had offered zero taxation on pensions for ten years, it has now switched to a 10% tax on pensions incomes – while Italy offers a 7% rate for expatriate pensioners who move to a southern town with a population of fewer than 20,000.
Late-payment crisis intensifying
Figures from the Federation of Small Businesses will this week show that more than a third of small firms that raise external finance use it to manage cashflow rather than invest for growth. The report will also point to the impact of late-payments, warning that the matter is increasingly hurting small businesses despite Government efforts to crack down on larger firms failing to promptly settle bills with suppliers.
The Sunday Times, Business and Money, Page: 2
ECONOMY NEWS FOR THE WEEKEND TO 16TH FEBRUARY 2020
Carney: Johnson’s election win sees confidence rebound
Mark Carney, governor of the Bank of England, says Boris Johnson’s general election victory has prompted a “rebound in confidence” in the economy, adding that Britain is moving to address its main economic problem – weak productivity. In a Reuters interview in which he was quizzed on the potential upsides for the economy resulting from Brexit, Mr Carney said: “In an environment where everything is getting a fresh look, it’s fertile ground for taking a step back and making bigger changes than otherwise might have been made.” He added: “It’s early days but there are several initiatives – the budget will be telling – that suggest that some of these opportunities are being grasped.” He went on to say that while data shows it is “absolutely clear” that Brexit has had “a notable impact on investment,” Britain’s departure from the EU could prove to be “a conceptual positive’” for the UK and is “prompting a reassessment of economic policy, structural economic policy.” On the election result which brought an end to uncertainty over Brexit, Mr Carney said: “We are already seeing a rebound in confidence, business confidence and to some extent a firming of consumer confidence.”
A third of Brits would add debt
A poll by R3 shows that a third of adults would take on extra debt if they got an unexpected bill or lost a job. The survey saw 13% say they would turn to a credit card, 11% would ask family and friends for a loan, 7% would take out an overdraft and 3% would apply for a bank loan or use payday lenders. Less than half of those polled said they had savings.
Daily Mirror, Page: 26
Retail growth expected
Retail sales figures set to be released by the Office for National Statistics this week are expected to show a return to growth after five months of either flat or declining sales. While December’s data saw the volume of retail sales fall by 0.6% compared with November, January’s figures are likely to show growth, with the British Retail Consortium’s (BRC) sales monitor, which covers the period to January 20, showing sales had picked up. BRC chief executive Helen Dickinson said that while January saw a return to growth, “recent political uncertainty and a decade of austerity appear to have ingrained a more thrifty approach among consumers.” With January’s figures the first since the election, Peter Dixon, international economist at Commerzbank, said: “It will be interesting to see if the Boris factor has positively affected consumer sentiment,” while Alasdair McKinnon, manager of Scottish Investment Trust, commented: “I would not expect any fireworks, but I am interested to see how the first full set of post-Election figures turn out.” Meanwhile, the Observer highlights that retail sales are expected to recover from -0.6% in December to +0.5%. It notes that while the BRC / KPMG health check of the retail sector found that total sales rose by 0.4% in January, sales were unchanged once increases in floor space were taken into account.
The Mail on Sunday The Observer, Page: 61
OTHER NEWS FOR THE WEEKEND TO 16TH FEBRUARY 2020
Storm blow for insurers
Storm Ciara, which hit the UK last weekend, is expected to cost up to £200m in insurance claims. Experts at PwC have warned that Storm Dennis, which is expected to hit this weekend, is likely to add to the final bill.
The Guardian, Page: 43
Contact Paul Southward.