NEWS FROM THE WEEKEND 9th DECEMBER 2019
NEWS FROM THE WEEKEND 9th DECEMBER 2019
TAX NEWS FROM THE WEEKEND 9th DECEMBER 2019
Parties’ tax plans questioned
Conservative analysis suggests the land value tax proposed by the Labour party, which would replace business rates, will increase a shop’s typical tax bill from £8,000 a year to £38,000. The Tories claim businesses in town centres where land values are highest will take the biggest hit while warehouses out of town on cheaper land, like those favoured by Amazon, would benefit. Communities Secretary Robert Jenrick said: “Corbyn’s Labour Party will hike up taxes on local firms across the country and wreck the economy …This is a new tax on high streets that will clobber struggling shops.” Jonathan Reynolds, Labour’s Shadow Treasury Minister, said the claims are “fake news” and suggested the Conservatives “promise nothing to turn round our high streets over the next five years.” The Tories say increased business rate relief for shops, pubs and retail premises could cut £5,000 in tax off a typica l outlet. However, the Mirror reports that the Tories’ mooted overhaul of business rates will save firms just 0.04%, cutting £10m from the combined business rate receipts of £25bn firms face. While the Conservatives say a rate cut will help 496,000 smaller shops, real estate adviser Altus says that as shops with a rateable value under £12,000 are exempt from the tax, only 143,370 will benefit.
Daily Express, Page: 6 The Sun, Page: 11 Daily Mirror, Page: 2
Opinion: Taxes will rise as borrowing must stop
Philip Aldrick in the Times muses on wealth equality, saying that taxing capital is more meritocratic than taxing pay. He suggests that Labour is right to want to equalise dividend and capital gains taxes with income taxes, and backs its call for shareholders to pay an “excessive pay levy” if they hand the boss a large pay package. He also says there is public support for a tax on net wealth above £750,000. On Conservative and Labour tax plans, Mr Aldrick insists that taxes will have to rise to pay for the services people want as we cannot borrow forever, “despite what both parties seem to believe.”
Tax perks and party season
Harry Brennan in the Telegraph looks at the rules around Christmas party expenses and deducting them from tax returns. Analysis by accountancy software firm FreeAgent shows that alcohol is the most claimed expense over Christmas, yet just a quarter of firms made a claim, while only one in 10 file an expense for food. Mr Brennan details HMRC’s rules, noting that there is annual tax relief on up to £150 per person attending a work event, including extra guests, or £125 plus VAT – but the party must be an annual event and be open to all staff to qualify for the tax break. Stephanie Wilson of BDO comments: “It is key to bear in mind that HMRC is taking an increasing interest in how organisations classify staff and business entertaining, setting up specialist teams of corporate tax, employment tax and VAT specialists to undertake specific reviews of entertaining expenditure.”
Zena Hanks of Saffery Champness and BDO’s Paul Falvey offer an FT reader advice on tax issues, including upcoming changes to capital gains tax and reforms the next government may deliver. Elsewhere, Stefanie Tremain of Blick Rothenberg offers advice on property taxation in response to a query from a Telegraph reader.
Financial Times, Money, Page: 17 The Daily Telegraph, Property, Page: 8
Labour would force millionaires to publish tax returns
The Sunday Times reports that Labour intends to force people earning £1m and above to publish their tax returns, in a move that would affect 21,000 Britons, according to calculations by the Institute for Fiscal Studies (IFS). The initiative, detailed in Labour’s Fair Tax Programme, states: “The public has lost faith that our tax system is a level playing field, with multinationals dodging tax and the wealthy getting away with contributing very little. Labour will erode this secrecy by making the tax returns of wealthy individuals publicly available.” Accountants including Nimesh Shah at Blick Rothenberg and Mike Hodges at Saffery Champness question the efficacy of such a policy and whether it could be challenged in court on grounds of discrimination and privacy. A Labour spokesperson said the £1m threshold would include “all relevant contributions to earnings”, adding: “If the super-rich have nothing to hide, they have nothing to fear.” Separately, Robert Watts in the Sunday Times predicts that a Labour victory in Thursday’s general election would spark a City exodus and massive capital flight. He says this would be triggered by party policies including a financial transactions tax designed to raise £8bn, and marginal tax rates of up to 67%.
Interview: Business Secretary Andrea Leadsom
In an interview with the Sunday Telegraph, Business Secretary Andrea Leadsom says businesses she speaks to desperately want an end to the uncertainty, whether they favour Brexit or not, and insists a large amount of investment is waiting to come into the UK. Ms Leadsom is also upbeat on the prospects of securing a trade deal with the EU by December 2020 and suggests the UK also won’t be diverging from EU regulations “just because we can”. On tax, she says the Conservatives are “not intending to raise any taxes for businesses” and that the overall burden of business rates will come down. Ms Leadsom goes on to outline how she would like to see the corporate governance code strengthened “to ensure that directors really do take clear responsibility for behaving in the right way”. She also wants new laws protecting pension pots as well as more board diversity and a more powerful small business commissione r able to fine bigger firms exploiting suppliers.
Couples soon able to shelter up to £1m from IHT
Mark Atherton details in the Sunday Times how next year, couples leaving a family home to their direct descendants will between them be able to shelter up to £1m from IHT. This is because the residence nil-rate band will rise to £175,000 per individual or £350,000 per couple, added to the basic IHT allowance of £325,000 per person. It is noted however that if the property passes into a trust on the deceased’s death, it will not be directly inherited and the residence allowance will not be available.
EMPLOYMENT NEWS FROM THE WEEKEND 9th DECEMBER 2019
Johnson unveils plans for post-Brexit immigration system
Post-Brexit immigration reforms planned by Boris Johnson will see new restrictions placed on unskilled migrants, who will be permitted to come to the UK only if there are specific shortages of staff in any given sector and their stay will only be temporary. The Prime Minister’s proposals for an Australian-style points-based immigration system will also offer fast-track entry to migrants identified as high skilled and ban anyone convicted of a serious crime. The changes will be implemented in January 2021 and will be followed by the introduction of a “digital immigration status” from 2022 making it easier for officials to crack down on those who overstay illegally.
CORPORATE NEWS FROM THE WEEKEND 9th DECEMBER 2019
Eddie Stobart rescue deal backed by shareholders
Eddie Stobart shareholders have backed a rescue deal – saving 6,500 jobs. A proposal put forward by private equity firm Dbay Advisors was backed by 81% of investors. Deloitte had been lined up as administrator in case the rescue deal had been rejected.
The Daily Telegraph, Page: 37 The Times, Page: 53 The I, Page: 70 The Guardian, Page: 43 Daily Express, Page: 65 The Independent, Page: 38 Daily Mail The Sun, Page: 52
Jessops calls in administrators
Jessops has called in administrators to its property arm, having been considering a restructure for several months. The camera retailer is thought to have called in administrators after failing to win backing from landlords for a CVA that would see store closures and rent reductions.
The Guardian, Page: 43
Second-rate bosses shouldn’t be allowed to loot businesses
Fixed share allocations are increasingly replacing long-term incentive plans for executives, with PwC’s Tom Gosling saying the past two years have seen “quite a decisive shift” as investors cool on them.
Clugston enters administration
Administrators from KPMG have been called in for the Clugston Group, which has companies involved in construction, civil engineering, logistics, property development and facilities management.
Yorkshire Post, Page: 11
Flagship to shut up shop
Retailer Watt Brothers’ flagship Glasgow store will close next weekend, administrators at KPMG have confirmed. This comes almost two months after the retailer fell into administration.
The Scotsman, Page: 31
PROPERTY NEWS FROM THE WEEKEND 9th DECEMBER 2019
House prices climb in November
House prices increased at the fastest rate in seven months in November, Halifax data shows. Values were up 2.1% to an average of £234,625 in the year to November, exceeding the 0.9% year-on-year increase recorded in October. On a monthly basis, prices were up 1%, having dipped 0.1% the previous month. Halifax’s analysis show’s stronger yearly growth than other recent surveys, with Nationwide saying prices were up 0.8% year-on-year in November and Rightmove saying values were up 0.3%. Howard Archer, chief economic adviser to the EY Item Club, commented: “With the economy largely struggling, Brexit uncertainties extended and the UK political uncertainties currently high, it seems unlikely that the housing market will see any sustained significant pick-up in the near-term at least.”
Landlords look to sell
Analysis shows that more than 100,000 rental homes have been sold since a tougher tax regime was introduced, with new rules including tighter limits on costs that can be offset against tax seeing some buy-to-let landlords face a marginal tax rate of more than 100%. Data from estate agency Savills shows that 103,900 more buy-to-let homes have been sold than bought since the new tax regime, which is being phased in until 2021, was introduced. A poll for the Telegraph suggests 26% of buy-to-let owners plan to sell at least one of their properties during 2020. Of those looking to sell, 15% said they plan to do so because of unfavourable tax rules.
The Daily Telegraph, Money, Page: 1
PENSIONS NEWS FROM THE WEEKEND 9th DECEMBER 2019
Grandparents dip into pensions to offer property help
Figures from the Financial Conduct Authority show that over-75s withdrew £247.5m from their pension savings in the year to April 2019, compared with £158.7m the previous year, an increase of 56%. Analysts suggest that people dipping into their pots to help their children and grandchildren to buy property has contributed, with a study from insurer Legal & General saying more than 27,200 homes were bought with help from grandparents last year.
The Times, Page: 65
Women make do with half a man’s pension
Data from the Office for National Statistics (ONS) shows men aged 65 to 69 have a median £315,300 saved in their work pensions, compared with £157,900 for women the same age. The pattern continues for 70 to 74-year-olds and the over-75s. Investment firms say one contributory factor that makes women poorer in retirement is the gender pay gap, which currently stands at 17.3% across all employees. Other factors include women being more likely to work part-time or take time out of the workplace to care for family members, such as children or elderly parents. Emma-Lou Montgomery of Fidelity comments: “These figures are particularly concerning when you take into account the fact that women are likely to need their savings to last longer and may be subject to career gaps.”
SMEs NEWS FROM THE WEEKEND 9th DECEMBER 2019
Big hopes for small shops
The Federation of Small Businesses (FSB) has urged shoppers to get behind today’s Small Business Saturday – an initiative which seeks to encourage people to shop locally. FSB chairman Mike Cherry said: “We’re calling on all shoppers to forget Black Friday and get behind this unique celebration of independent businesses.” Mr Cherry’s call comes after FSB research found that just one in three smaller retailers expects their prospects to improve over the coming three months, while 58% expect things to worsen. Despite this, and a weakening economy, data shows that the number of SMEs in the UK jumped by 200,000 to more than 5.8m in the past year. Last year’s Small Business Saturday saw an estimated £812m spent with small businesses.
Daily Mirror, Page: 2
Digital bank risks breaking small business loan pledge
The Sunday Times’ Emma Dunkley reports that Starling Bank committed to making almost £1bn of loans within five years as a condition of winning funding from a £775m pot set aside by Royal Bank of Scotland but has so far lent less than 1% of the amount it promised to small businesses, raising questions over whether it can meet its target by 2023.
Four in ten small business owners suffering “most turbulent” period ever
A poll of 500 small business owners found one in four think their operations will not exist in five years due to late payments, cyber-attacks and tax rates, the Sun reports. Four in ten say they are enduring the “most turbulent” period they’ve ever experienced.
The Sun, Page: 8
ECONOMY NEWS FROM THE WEEKEND 9th DECEMBER 2019
UK ready to take off, says buyout chief
Dan Zilberman, the European chief of buyout firm Warburg Pincus tells the Sunday Telegraph that his takeaway from talking to business is that a flood of business investment will wash into Britain after the election. Mr Zilberman said: “Everybody that’s so negative on the UK is missing something, and our view is post-election, post-Brexit the UK markets are going to take off very considerably.” He added: “I believe that once Brexit is resolved one way or the other, all that pent-up demand is going to come into the market and it is going to take off.” Also in the Sunday Telegraph, Sir Paul Marshall, chairman of Marshall Wace, predicts an economic boom if Boris Johnson wins power while Sir Gerry Grimstone, former chairman of Barclays Bank and Standard Life, also backs Johnson in a piece in the same paper. Howard Archer, chief economic adviser to the EY ITEM Club, tells Geoff Ho in the Sunday Express that whoever wins uncertainty will continue but a Johnson win is “the most comforting result for the economy”. In the Sunday Times, Luke Johnson asserts that Corbyn’s Labour would “cause vast da mage to our economy and reverse decades of progress in overall living standards.”
The Sunday Telegraph, Business, Page: 1, 26 The Sunday Telegraph, Page: 7 Sunday Express, Page: 43 The Sunday Times, Business, Page: 9
OTHER NEWS FROM THE WEEKEND 9th DECEMBER 2019
Books to fuel the post-festive lunch debate
The FT reviews Dominic Frisby’s Daylight Robbery, How Tax Shaped Our Past and will Change our Future and Margaret Hodge’s Called to Account: How Corporate Bad Behaviour and Government Waste Combine to Cost us Billions.
Pundit loses Coutts battle
Danny Murphy has lost a £1m tax avoidance tussle with the Queen’s bank Coutts. The Match of the Day football pundit took out loans of £640,000 and £296,000 to put into the Ingenious film scheme which was declared illegal by HMRC. Murphy sued the bank arguing he was misled into investing but the High Court has thrown out the claim.
The Sun, Page: 16
Contact Paul Southward.