NEWS FOR THE WEEKEND TO 1ST MARCH 2020
NEWS FOR THE WEEKEND TO 1ST MARCH 2020
TAX NEWS FOR THE WEEKEND TO 1ST MARCH 2020
Freelancers given a year to get used to tax shake-up
The Treasury will not punish freelancers facing tough new tax avoidance measures for any mistakes on their returns for 12 months. With IR35 rules due to come into force on April 6 set to make medium and large businesses responsible for setting the tax status of contractors they hire, Chancellor Rishi Sunak has said that businesses and contractors would not have to pay penalties for errors in compliance in the first 12 months “except in cases of deliberate non-compliance”. Julia Kermode, the chief executive of the Freelancer & Contractor Services Association, says that with the general election delaying HMRC’s education programme, “a number of businesses are only finding out about the reforms and their new liabilities now, weeks before they take effect.” An inniAccounts study looking at the potential impact of the new rules, which are designed to tackle disguised employment, shows that 70% of 350 organisations polled – including Deloitte – were no longer willing to use contractors.
Javid planned to cut income tax
Former Chancellor Sajid Javid has revealed that he wanted to cut 2p from the basic rate of income tax, adding that he also hoped to reduce stamp duty. On plans to deliver the first to the basic rate of income tax for 15 years, he says he intended to reduce the basic rate from 20p to 18p in the pound from April and cut it to 15p by the end of the parliament.
PM urged to overhaul tax system
Andrew Griffith, the Prime Minister’s chief business tsar, believes Britain would see “huge benefits” in fundamentally overhauling the tax system, urging ministers to seize “tantalising and tangible” opportunities as Britain leaves the EU. Mr Griffith said: “It is my belief that, in the 21st century, huge benefits would flow from unifying the income tax and national insurance regimes, and from clarifying once and for all the ambiguities that lie around employment status.”
Doctor claims to be highest-taxed for pension growth
A paediatrician handed a £125,000 tax bill for 2017/16 says that, having paid nearly 80% of his salary in tax, he has “worked for the NHS for free”, adding: “I’m in the red and I think I am the highest-taxed NHS doctor for pension growth.” Dr Nicholas Grundy, of campaign group GP Survival, said the doctor, who opted back into the final salary pension scheme after a five-year break, during which his salary had doubled due to a promotion, would have been better off staying in the scheme in previous years. Kevin Walker, of BW Medical Accountants, suggests the doctor’s bill will likely be smaller as he can use any spare allowance from the previous three years and reduce his liability.
The Daily Telegraph, Money, Page: 4
Teachers face pensions tax taper woes
The Telegraph says teachers face the same issues as doctors when it comes to the pensions tax taper, with 3,465 people in the Teachers’ Pension Scheme breaching their annual allowance in the 2018/19 and 6,000 doing so the year before. Mary Bousted of the National Education Union said unexpected tax bills were taking too much valuable attention from teaching, adding: “We should try to avoid these issues causing the same problems in teaching as they have in the NHS. They are affecting growing numbers of senior leaders, in part because the annual allowance has been frozen since April 2014.”
The Daily Telegraph, Money, Page: 4
Insurance tax raises twice as much as gambling
The doubling of insurance premium tax in the past five years means it now generates twice as much as gambling duty, a report by the Social Market Foundation shows. The tax is expected to raise £6.2bn this financial year, while betting and gambling duty will raise £3.14bn.
Tax implications of property gift
A Times reader asks for advice on the most tax-efficient way of transferring ownership of a property, with Chris Etherington, a tax partner at RSM, advising that gifting a share in the reader’s holiday flat may trigger a 28% capital gains tax liability, while Paul Falvey, a tax partner at BDO, offers insight on whether stamp duty would be a factor. Elsewhere, a Telegraph reader seeks advice on capital gains tax in relation to a property they bought for their parents in 1968, with Stefanie Tremain, a private client adviser at Blick Rothenberg, providing guidance.
The Times, Page: 65 The Daily Telegraph, Property, Page: 12
Budget set to abolish entrepreneurs’ relief
Chancellor Rishi Sunak is set to abolish entrepreneurs’ relief, which taxes owners who sell their businesses at a reduced rate of 10% – rather than the standard 20% – up to a threshold of £10m. The Resolution Foundation have described the relief as “the UK’s worst tax break”, arguing that scrapping the “expensive, regressive and ineffective” tax would generate £2.7bn that could be spent on the public sector. It is noted that the relief costs five times as much as it did when introduced 12 years ago, rising from £427m in 2008/09 to £2.7bn in 2018/19. The Sunday Times says plans to abolish entrepreneurs’ relief have “already led to a backlash from business champions”, with a group of 150 prominent business owners writing to the chancellor on Friday urging him not to scrap the relief. The paper warns that the Government “needs to be careful” and must show business that ministers are on its side, adding that cancelling a planned and costed cut in corporation tax from 19% to 17% “jarred with its ambitions to make Britain the preferred post-Brexit location for international businesses.”
The Sunday Times, Page: 2 The Sunday Times, Page: 22 The Mail on Sunday, Page: 29
MP warns over scrapping IHT exemption
With Chancellor Rishi Sunak believed to be considering scrapping the 100% inheritance tax exemption for farmers passing on land in his Budget, John Stevenson MP has warned that doing so could lead to an increase in aggressive avoidance schemes. Mr Stevenson, head of the all-party parliamentary group on inheritance tax and intergenerational fairness, commented: “Just cutting the exemption and leaving the rate unchanged would be quite harsh and farmers wouldn’t take it lying down.” Mr Stevenson has called for a full-scale review of the death tax. George Bull, of RSM, comments that the regime is ripe for review and suggests Mr Sunak may well announce a consultation on overhauling the tax in the Budget.
The Sunday Telegraph, Business and Money, Page: 14
Opinion: Budget should see self-assessment scrapped
James Coney in the Sunday Times proposes that the tax return should be scrapped. He says that the autumn Budget will “provide a much greater opportunity to set out changes to taxation” as the UK’s economic position and relationship with Europe should be much clearer, so the Chancellor should use his upcoming Budget to axe the tax return. He suggests advances in technology and the advent of the digital tax account means annual tax returns could be redundant.
Taxpayer urges HMRC to accept tax payment
The Mail on Sunday’s Tony Hetherington helps a reader tackle a tax issue which saw her unable to pay a final corporation tax bill, with HMRC unable to accept payment as the company is closed. He highlights that the matter stems from the fact that since the company no longer exists, neither does its tax reference number. Mr Hetherington quips that the case “really does come under the heading of ‘You Just Couldn’t Make It Up!’”, with a taxpayer “fighting with the Revenue, not to pay no tax or less tax, but pleading to be allowed to hand over £2,232.”
The Mail on Sunday, Page: 108
Professor questions farmers’ tax breaks
Dr Tim Leunig, an associate professor at the London School of Economics and a senior economic adviser to Chancellor Rishi Sunak, has suggested farmers should not be given tax breaks denied to other industries. He said: “We know that supermarkets also make very little, and that lots of restaurants go bust … Not sure I buy a ‘life is tough for farmers, easy for restaurateurs’ approach.”
The Mail on Sunday, Page: 10
Brady hits out at IHT
Writing in the Sun, Karren Brady says that with the Chancellor said to be looking to make changes in the law to stop people from taking advantage of the loopholes in inheritance tax, scrapping the tax would be a better idea. She says IHT is “double taxation and it is grossly unfair.”
The Sun on Sunday, Page: 25
CORPORATE NEWS FOR THE WEEKEND TO 1ST MARCH 2020
NMC shareholders ‘could be left with nothing’
Analyst James Vane-Tempest of Jefferies says NMC Health investors could be left with nothing if an accounting and governance scandal escalates, saying the possibility of a restructuring of the capital structure cannot be ruled out. The Times notes that questions have been raised about the audit of NMC Health by EY, while a spokesman for the Financial Reporting Council has said: “If there is evidence to suggest non-compliance or audit failures, we would review in accordance with our usual procedures.”
Gupta-owned bank launches independent review after regulatory heat
Wyelands Bank is launching an independent review of its lending practices, issuing a tender to forensic accountants after the Prudential Regulation Authority reviewed lending to businesses controlled by its owner.
BrightHouse on the brink
The rent-to-own retailer BrightHouse has put Grant Thornton on standby to handle an administration that would put 2,400 jobs at risk. The company has been hit by mis-selling claims and in 2017 was ordered by the Financial Conduct Authority to pay £14.8m to 249,000 customers after persuading them to take out unaffordable debts. Sky News notes that other advisers including EY have been working with BrightHouse to explore alternative options in recent months. A spokesman for the retailer said: “BrightHouse is exploring a range of options to cap its exposure to claims for historic mis-selling.” A source added that while an insolvency is not inevitable, it has become more likely in recent weeks.
‘Material uncertainty’ for Temperley
Auditors have warned over the financial health of fashion brand Temperley London, where losses more than doubled to £3.5m during 2018. RSM has warned a “material uncertainty exists that may cast significant doubt on the company’s ability to continue as a going concern”. This comes despite the luxury womenswear label raising £1.9m in funding during 2019, with RSM saying its net liabilities totalled £4.6m in 2018, compared with £1.2m in 2017.
Poundstretcher exploring restructuring options
Poundstretcher is exploring restructuring options that could see store closures and job losses. Sources say the retailer is assessing options with BDO, which already works as its auditor, and that while plans have not been finalised, the chain may pursue a CVA or a pre-pack administration.
Debenhams demands rent cuts
Debenhams has told landlords its lenders may not sign off a critical debt restructuring unless they consent to further rent cuts. The Sunday Times’ Sam Chambers suggest the cuts “will be a tough sell to landlords”, noting that they have already seen rent reductions of between 25% and 50% through a CVA that led to 22 store closures in May 2019.
PERSONAL FINANCE NEWS FOR THE WEEKEND TO 1ST MARCH 2020
Looking at the leap year
The Telegraph’s Adam Williams looks at how February 29 means self-employed people and contractors can boost their earnings, while employees paid an annual wage will effectively spend the day working for free. Analysis of Office for National Statistics data by HW Fisher shows that paying for an extra day of food, gas, electricity, water and running a car would cost an average person £16.60, while non-variable costs – such as accommodation, memberships, subscriptions and phone and broadband bills – equal a gain of £26.
Spotlight on employee share schemes
The Investment Association has urged the Government to set targets to boost the level of employee ownership of quoted companies, with the proportion of UK shares held by individuals having dipped from 28% in 1981 to 12%. Research by the Social Market Foundation shows that only 13,000 companies out of 1.4m run one of the four types of share scheme that offers tax breaks.
163k join Help to Save
HMRC data shows that around 163,000 people have signed up to the government’s Help to Save saving scheme – depositing more than £4m. Help to Save offers working people on low incomes a 50% bonus, offering 50p for every £1 saved with a maximum bonus of £1,200 over four years.
ISAs and IHT
The Sunday Times looks at tax issues in relation to ISAs, noting that while there is no liability to pay income tax or capital gains tax on any withdrawals from Isas, they provide no protection from inheritance tax unless the assets are being left to a spouse or partner. Alex Davies, founder of investment specialist the Wealth Club, explains how some shares listed on the junior AIM market can keep an Isa IHT-free.
The Sunday Times, Business and Money, Page: 13
PENSIONS NEWS FOR THE WEEKEND TO 1ST MARCH 2020
Age for cashing in pension set to climb
The Mail reports that plans being drawn up by the Treasury could see savers forced to wait another two years to dip into their pensions, with Chancellor Rishi Sunak “under pressure” from pensions firms to raise the minimum pension age from 55 to 57 amid fears many households have been cashing in their retirement funds too quickly. The Association of British Insurers has warned that more than 350,000 savers cashed in their entire pension pot last year, adding that many are in danger of falling into poverty in retirement.
Daily Mail, Page: 24
Letter: Flat-rate tax relief would encourage pension saving
In a letter to the FT, John Ralfe of John Ralfe Consulting calls for a 30% flat rate of tax relief on annual pension savings, saying the current system is unfair.
PROPERTY NEWS FOR THE WEEKEND TO 1ST MARCH 2020
Stamp duty cut would not sink Treasury revenues
The Centre for Policy Studies claims that removing nine in 10 homes from the stamp duty regime would have almost no impact on Treasury revenues as property transactions would increase. While such a tax cut would cost £3.7bn, it is calculated that the additional transactions would allow between 65% and 95% of lost revenue to be recouped. The think-tank has proposed raising the threshold at which stamp duty is payable from £125,000 to £500,000 and cutting the rate to 4% for properties valued at between £500,000 and £1m and to 5% for properties worth more than £1m.
The Daily Telegraph, Money, Page: 10
UK house price growth at highest rate for 18 months
UK house prices rose at the fastest annual rate for 18 months in February after December’s decisive election buoyed the market, according to Nationwide. The 2.3% annual increase is the best since July 2018 and outdoes January’s 1.9% climb. Nationwide’s chief economist Robert Gardner said the conclusive election result in December may have pushed buyers back into the market. However, the outlook for house prices will depend on the UK’s economic performance over the coming months, which could take a hit depending on the outcome of Brexit trade talks and the impact of the coronavirus outbreak. “There are still significant uncertainties that threaten to exert a drag on the economy in the coming quarters,” Mr Gardner warned.
The Daily Telegraph The Times, Page: 58 The Guardian
London leads on ATED take
Ali Hussain looks at Annual Tax on Enveloped Dwellings, a charge levied on private homes owned via a company. It was launched in 2013 to make indirect ownership of homes less attractive. Data for the tax year 2017/18 analysed by law firm Boodle Hatfield shows that London boroughs Kensington and Chelsea and Westminster receive 75% of the £138m take from the tax – which has fallen 28% since 2015.
BTL deals increase
Figures from UK Finance show there were 5,700 new buy-to-let mortgages completed in December 2019, marking a 3.6% year-on-year rise, while remortgages were up 2.3% to 13,300. The Sunday Telegraph says that while landlords have been hit in recent years by fewer tax breaks, rising costs and a market slowdown, the figures for December suggest “the tide could finally be starting to turn”.
The Sunday Telegraph, Business and Money, Page: 10
SMEs NEWS FOR THE WEEKEND TO 1ST MARCH 2020
Small firms urge EU deal
A poll of small businesses by finance specialist iwoca has seen many warn that their future rests on ministers clinching a trade deal with the EU. Almost two-thirds said exporting to Europe is more important than any other part of the world. The study also found that more than a half of bosses want a review of business rates.
The Mail on Sunday, Page: 29 The Sun on Sunday, Page: 6
INTERNATIONAL NEWS FOR THE WEEKEND TO 1ST MARCH 2020
OECD seeks international guidelines for DSTs
Business adviser Irwin Stelzer looks at plans for digital services taxes, with Austria, Italy, Hungary, Turkey and France having enacted such levies while Belgium, the Czech Republic, Slovakia, Spain and the UK have published proposals to adopt such a tax. He says that a regime in which digital services taxes vary from nation to nation places a “huge administrative burden” on the companies liable for them. Mr Stelzer highlights that the OECD is trying to broker a deal that would set international guidelines for the taxation of online activity and for a global minimum tax.
EMPLOYMENT NEWS FOR THE WEEKEND TO 1ST MARCH 2020
University adds £100,000 but not worth it for a fifth of graduates
Institute for Fiscal Studies analysis for the Department for Education shows that a university education increases lifetime earnings by at least £100,000 on average, while the Government is boosted by the additional taxes graduates pay. However, the study found that a fifth of people who go to university would be financially better off if they had not. Each year an estimated 70,000 graduates end up losing money over their lifetime because they did an undergraduate degree.
The Daily Telegraph, Page: 8 Financial Times, Page: 2 The Guardian, Page: 2 The Independent, Page: 12 Daily Express, Page: 23
ECONOMY NEWS FOR THE WEEKEND TO 1ST MARCH 2020
Mark Carney warns coronavirus will hit the UK economy
Bank of England governor Mark Carney has warned that coronavirus is likely to slow economic activity, with it “hard to be precise about the magnitude and, very importantly, the duration”.
Markets expected to fall further
World stock markets, which have already been hit by the coronavirus outbreak, are expected to fall further next week. This comes as the first surveys of China’s economic health since the outbreak show factory output has plunged to record lows and the service sectors have contracted. Global stock markets fell 11% last week, marking the worst seven-day period for stocks since the 2008 financial crash. The MSCI all-country index shows that markets globally lost about £3.9trn of value last week.
OTHER NEWS FOR THE WEEKEND TO 1ST MARCH 2020
Educators lead on adult searches
Research by MyJobQuote shows that an average of 577 Google searches for adult content containing the word ‘accountant’ are made each month. Teachers are the most searched for profession on adult websites, with 40,556,200 average monthly Google searches, with maids and nurses the next most popular professions.
Ministers to review business grant system
The Department of Business, Energy & Industrial Strategy is to review how business grants are handed out following a rise in fraudulent claims. Sources claim ministers have approached accountancy firms including KPMG to carry out the review, although no decision been made on which firm to appoint. Peter Evans in the Sunday Times says the review is likely to examine the system for awarding grants, pointing to criticism that it is “opaque and fails to track the progress of companies awarded cash”.
Bitcoin transaction equal to 2 months of household electricity
A single Bitcoin transaction uses the same amount of electricity as a British household would over nearly two months, analysis shows. Alex de Vries, a blockchain specialist at PwC, says the carbon footprint of a single transaction is the same as 782,718 Visa transactions or spending 52,181 hours watching YouTube.
The Sunday Telegraph, Page: 8
Contact Paul Southward