News Roundup Friday 9th August 2019

NEWS ROUNDUP

TAX NEWS

Families allowed to make tax decisions for incapacitated relatives

A judge has ruled that a family may make tax exempt gifts on behalf of a wealthy relative who has been in a coma for several years. District judge Sarah Ellington ruled in the Court of Protection that millions of pounds of gifts to family, charities and political organisations, which would reduce tax payable on death, were in the best interests of the man, who is in a persistent vegetative state. Lynne Rowland, a private client tax partner at Kingston Smith, called the ruling “ground-breaking”, saying it sets a precedent for carers to cut tax bills after someone has lost the ability to look after their own money, even if they had never previously expressed a wish to do so. Ms Rowland said the ruling also has “huge implications for inheritance tax – potentially saving thousands of pounds for the beneficiaries.”

The Daily Telegraph, Page: 8

3 in 4 would pay more tax to ease care crisis

Research by the GMB union shows that three-quarters of people would be willing to pay more tax if the money went toward social care, while just 7% would oppose an increase in income tax or national insurance designed to boost the care system.

Daily Express, Page: 2

Opinion: Tax everyone to deliver solidarity

Bill Jamieson in the Scotsman considers the possibility of reform of the tax system. He notes that while the UK tax take is set to hit a high of £756bn this financial year, data from the Institute of Fiscal Studies shows that 43% of adults do not pay income tax, up from 38% in 2010. He questions the fairness of this, saying that “in the interests of social cohesion and social solidarity, everybody should pay something.”

The Scotsman, Page: 23

Non-dom exodus sees tax receipts fall

The number of super-wealthy UK residents who pay no tax on foreign earnings in Britain has hit a record low, according to HMRC, taking tax receipts with them. There were 78,000 non-domiciled taxpayers in Britain last year, down from 98,500 the year earlier, HMRC figures showed, taking the tax paid into UK coffers by non-doms down from £9.5bn to £7.5bn. The Revenue said that of those who stopped using non-dom status, about half switched to domiciled status and continued to pay tax in the UK, while half left the British tax system altogether. It has been suggested that Brexit uncertainty and fears that a Jeremy Corbyn-led government would introduce a “wealth tax” have seen a number of wealthy people leave the UK. James Hender, head of private wealth at Saffery Champness, said the Government’s non-dom reforms “may have started to bite”, suggesting a change in rules that came into force in April 2017 “is arguably the main driver of the continued fall, with many people no longer able to benefit from non-dom treatment.”

The Times, Page: 9 The Guardian, Page: 35 Daily Mail, Page: 2 City AM BBC News

Equality call for pension taxation

Former shadow pensions minister Gregg McClymont considers the Government’s pledge to review the impact of the tapered annual allowance on the public sector to address concerns about pensions tax. This, he argues, “would be a bad move” as tax law needs to apply equally across the sectors, warning that the review could lead to different tax rates for the public sector and the private sector. Writing in the I, Mr McClymont goes on to suggest that the taper needs to be scrapped entirely, saying pension tax relief is unsustainable now that auto-enrolment has brought an extra 10m people into workplace pension saving.

The I, Page: 41

SMEs NEWS

Letter: EORI rethink needed

In a letter to the Times, Martin McTague of the Federation of Small Businesses warns th at a no-deal Brexit could see thousands of small businesses unable to import from, or export to, the EU. He highlights concerns that large numbers of businesses will not have the Economic Operator Registration and Identification (EORI) numbers that they require to continue trading within the EU, with only a third of those in need of an EORI number having applied. He says the solution would be to drop the requirement to apply for an EORI number and automatically issue the numbers to all VAT-registered firms that trade exclusively with the EU.

The Times, Page: 26

Female entrepreneurs more likely to take a salary cut

A study by small business investor Iwoca shows that female entrepreneurs are more likely to take a salary cut to get a new venture off the ground than men. The poll of 400 entrepreneurs shows that 46% of women sacrificed income to launch their business, compared to 34% of men. The study also found that while 28% of men sacrifice family time when starting a company, 18% of women do the same.

The Daily Telegraph, Page: 8

Co-op Bank increases small business lending

Co-op Bank has increased its lending to small business customers for the first time in six years, with deposits rising 2.5% in the first half of the year. The lender, which currently has 3.5m retail customers and 85,000 small business customers, is the UK’s seventh biggest provider of loans to small businesses but put the brakes on lending in 2013 after discovering a £1.5bn hole in its finances that threatened its survival. With Co-op having secured £15m of funding from the Banking Competition Remedies, which is designed to increase competition for lending to small businesses, CEO Andrew Bester commented: “I see our SME business as key for growth.”

The Times, Page: 41 The Daily Telegraph, Page: 31 The I, Page: 41 Daily Express, Page: 50 The Sun, Page: 49 Daily Mirror, Page: 46 The Scotsman, Page: 33 City AM The Press and Journal, Page: 30 Yorkshire Post, Page: 18

EMPLOYMENT NEWS

Shortages of skilled staff triggering pay rises

New research from the Recruitment and Employment Confederation and KPMG has found that workers are in high demand and are taking home a bigger chunk of the economy’s earnings than thought – about 10% more hours of work than a decade ago. Official data showed regular pay in June was up 3.6% on the year – the fastest rise in 11 years. The REC/KPMG research suggested that this could continue to rise as employers have to pay more to attract staff. The IT and computing industry has the most vacancies for permanent jobs, followed by hotels and catering, engineering, and the accounting and financial sector.

The Daily Telegraph, Page: 29

‘Brexit breakthrough’ could boost hiring

The Mirror looks at a KPMG and Recruitment & Employment Confederation report showing that permanent staff appointments fell for a fifth month running in July with temporary hires falling to a six-year low. KPMG vice chair James Stewart commented: “Businesses continue to take a cautious approach to hiring as Brexit and economic uncertainty linger. They will be eager to see a Brexit breakthrough in Westminster to help re-establish market confidence on hiring and investment.”

Daily Mirror, Page: 46

PENSIONS NEWS

Pensions tax review to go beyond health service

Chancellor Sajid Javid has vowed to review the pensions taper which has seen high-ranking doctors hit with high tax bills, prompting some to reduce their hours or, in some cases, retire. The review will consider the impact of the taper on other public sector staff, not just those in the health service.

Financial Times, Page: 3 Financial Times, Page: 1

PERSONAL FINANCE NEWS

Insolvencies up in Q2

Analysis of Insolvency Service data by RSM shows that under-25s make up 6.5% of all personal insolvencies, compared to 1% three years ago. Q2 2019 saw a total of 31,000 people declare bankruptcy, a 7% increase on the number recorded in Q2 2018.

Daily Mirror

PROPERTY NEWS

House prices dip 0.2% in July

UK house prices slipped 0.2% month-on-month in July, according to Halifax’s latest figures, hitting an average of £236,120. Year-on-year, values are up 4.1%, with a 0.4% climb in the May to July quarter compared with the February to April period. Howard Archer, chief economic adviser at EY ITEM Club, said of Halifax’s data: “Housing market activity seemingly got some help from the avoidance of a disruptive Brexit at the end of March, but the overall benefit looks to have been limited.” Elsewhere, HMRC figures show that the number of home sales fell 16.5% year-on-year in June, with 84,490 properties sold, while Bank of England data shows that the number of mortgage approvals rose to 66,440 in June, a total 793 up on that seen in May.

The Guardian, Page: 31 Daily Mail, Page: 4 The Sun City AM

Rics: House prices and sales ‘losing momentum’

House prices and sales are “losing momentum”, the Royal Institution of Chartered Surveyors (Rics) said in its report for July. Some 69% of property professionals said that sales prices were coming in below asking prices for homes marketed at more than £1m. For properties on the market for up to £500,000, 59% of surveyors reported that sales prices were at least level with asking prices. A net balance of 9% of surveyors reported house prices falling rather than increasing. Simon Rubinsohn, Rics chief economist, said: “The forward-looking metrics on prices and sales also seem to be losing momentum as concerns, clearly voiced in the anecdotal feedback – both about Brexit and political uncertainty – heighten”.

BBC News

CORPORATE NEWS

Brexit bothers business?

Rashmi Dubé considers the impact Brexit may have, noting ICAEW research which suggests business confidence has declined and a quarter of smaller firms are having difficulties. She also highlights EY research suggesting that the City will be less accessible to the EU if no Brexit deal is secured, with around 9% of financial services companies moving their business abroad.

Yorkshire Post, Page: 2

Muddy Waters rocks Burford

Short seller Muddy Waters has torn into Burford Capital, accusing the litigation funder of “egregiously misrepresenting” returns. Muddy Waters confirmed that it now holds a short position and described Burford as “a poor business masquerading as a great one”. “Burford has been audited by EY since 2010 with clean audit opinions every year,” Burford said in a statement.

The Guardian, Page: 31 The Times, Page: 36 Financial Times City AM

Preferred British Steel buyer set to be named

Business Secretary Andrea Leadsom has contacted potential buyers for British Steel, saying one of the three firms left in the running will be named as the Government’s preferred option in the coming days. The official receiver took control of British Steel after its failure in May and will continue to run it during the sales process, which is being managed by EY.

The Guardian, Page: 35 City AM

Ashley’s buying spree will hurt auditor search

Mark Kleinman in City AM looks at Mike Ashley’s acquisition of Jack Wills, saying Sports Direct owner Mr Ashley’s “unwillingness to step back from his prolific buying spree” will make it harder for the retailer to secure a new auditor to replace Grant Thornton.

City AM, Page: 11

ECONOMY NEWS

Rates cut as downturn fears persist

Central banks are cutting interest rates as fears grow of an economic downturn amid concerns about slowing growth rates and weak inflation. New Zealand, India and Thailand have announced cuts that exceed forecasts, while the US Federal Reserve has made its first cut since the financial crisis. Australia’s central bank this week decided to hold its rate at a record low, while the Bank of England last week held its base rate at 0.75%.

Daily Mail

Online sales surge but high street struggles

In-store like-for-like sales increased 0.1% in July, according to BDO’s High Street Sales Tracker. Online sales fared far better, posting a 20.5% increase which marks the strongest growth figures since December 2017. BDO’s head of retail and wholesale, Sophie Michael, said 2019 “is proving to be a year to forget” for the high street, adding: “July’s flat sales figures will not only be disappointing for retailers but will also add further pressure to margins that are already being squeezed to the extreme.”

The Times, Page: 43 Daily Mirror, Page: 46 City AM

Economy vulnerable to housing crash

Economists at IHS Markit have warned that the world economy is vulnerable to a major housing crash, suggesting that risks stemming from prices which have soared since the financial crisis could have a greater impact than Brexit or the US-China trade war. It says that an outright collapse in property prices in key economies could see global GDP growth fall from current forecast rates of about 2.5% a year to a low of just 0.9% next year, although it would not deliver a full-blown global recession.

The Daily Telegraph, Page: 30

OTHER NEWS

Food suppliers eye competition rules waiver

With the Food and Drink Federation calling for competition rules to be relaxed in the event of a no-deal Brexit, Moore Stephens’ Duncan Swift said co-operation designed to maintain supply chains would be “really complex.”

Financial Times, Page: 2

Gaming growth

A report from Deloitte shows that Europe’s competitive video gaming market generated revenues of €240m last year, an increase of €50m on 2017’s total. Revenues in Europe are expected to rise 23% a year to hit €670m by 2023.

The Daily Telegraph, Page: 31

Taxman should tune in?

A letter to the Telegraph muses that HMRC may want to watch the BBC’s Antiques Roadshow as episodes regularly feature valuable items that have been given or bequeathed to the owner by a relative, adding: “Many of these fall well above the tax threshold for gifts or probate.”

The Daily Telegraph, Page: 15

Contact Paul Southward.

Paul Southward