News Roundup Monday 17th June 2019
News Roundup Monday 17th June 2019
Corbyn plotting major tax raid on gifts to children
The Labour leader is planning to impose a lifetime allowance of £125,000 on parents’ gifts to their children, the Sunday Telegraph reports. The proposal comes from the Labour commissioned report, Land for the Many, and would see any gifts beyond the allowance classified as income and taxed annually at income tax rates. The average house price in the UK is just over £225,000 meaning even those who inherit even the lowest value homes will be heavily taxed. The document states that the inheritance tax reforms “are designed to allow for the better sharing out of the unearned windfalls arising out of the housing boom.” An editorial in the paper says, “Labour’s proposed new inheritance tax would hit the very working class that it has pretensions to represent.”
The Sunday Telegraph, Page: 1 The Sunday Telegraph, Page: 17
Jeremy Hunt offers tax breaks for granny flats
Tory leadership hopeful Jeremy Hunt has proposed a tax break for families building accommodation for elderly relatives – a move he says would help ease the growing social care and childcare burden on the taxpayer. Mr Hunt said families in countries such as Spain and Italy “stick together more” so they have lower social care costs. Tax breaks to make it easier to create three-generation households would show people who “want to stick together that the State will support you”, Hunt added. Kate Andrews of the Institute of Economic Affairs analyses the various tax offerings from the leadership candidates in the Sunday Express concluding that cuts “to help those struggling the most should be high on the priority list.”
The Mail on Sunday, Page: 2 Sunday Express, Page: 14
Tom Welsh: Boris’s tax cuts are bang on the money
Tom Welsh describes Boris Johnson’s plans to cut taxes for higher earners as “bang on the money” making the point that many people taking home £60k are not necessarily “wealthy” at all – Tories who object to a tax cut for this group appear to be lacking “intellectual self ? confidence”, says Welsh. The oft-made case that lower taxes increase Treasury income is made by Welsh, who links Johnson’s proposals to Trump’s tax cuts in the US and plans in Australia to lower tax for millions; while Italy flirts with a 15% flat tax and France and Portugal hope lower taxes will stem emigration. Perhaps politicians in the UK should ask whether they should expect the British to stay put, just to “prop up a wasteful state that takes my contribution for granted?”
Taxman denies terror fraud failures
HMRC’s director of fraud investigation, Simon York, contradicts claims in the Sunday Times some months ago that the Revenue was negligent in its failure to inform the UK security services about a massive carousel fraud committed by men linked to terrorists. HMRC shares a “deep and integrated relationship” with the intelligence services while allegations “taxpayer confidentiality would override considerations of public safety” are “categorically untrue”.
Credit Suisse sues HMRC over bankers’ bonuses
Credit Suisse is suing HMRC for the £239m it paid the taxman under the former Labour government’s supertax on bankers’ bonuses. The Swiss bank is trying to recoup the cash arguing that the so-called bank payroll tax was “unfair” and punished banks whose bonus payouts fell between December 2009 and April 2010.
American landlords sue Green over closures
A group of American landlords have launched a legal challenge against Topshop’s bankruptcy in the US arguing that Arcadia “manipulated and gerrymandered” the CVA process in the UK to effect the “complete forfeiture and deprivation” of their rights. Five landlords, led by the property giant Vornado, are seeking over £100m and intend to challenge the CVA in the British courts. Arcadia’s adviser, Deloitte, has argued that the CVA is irrelevant to the American operations.
Goals sale process kicks off
Lloyds Bank, the lender to Goals Soccer Centres, has hired Deloitte to explore sale opportunities. Shares in Goals remain suspended after the five-a-side football operator discovered a £12m tax hole in its accounts in March. Forensic accountants from BDO were hired to investigate. Retail billionaire Mike Ashley is reportedly among prospective bidders.
The Sunday Times, Business, Page: 3 The Sunday Telegraph, Business, Page: 3
Harsh mortgage deals for buy-to-let professionals
A crackdown on higher-rate income tax relief on mortgage interest for buy-to-let has led more landlords to consider moving their flats and houses into a limited company, the Sunday Times reports. However, those who do are facing substantially higher mortgage rates than those acting as individuals (2.99% compared with 1.81%). The paper’s James Coney explains the tax advantages of holding a rental property in a company; but Paul Falvey of BDO warns: “Tax alone is rarely a good enough reason for holding property through a company.”
More retailers will fall victim to unrealistic rents and business rates
More retailers are likely to go under unless landlords and councils ease the burden on stores groups an expert has warned. Eileen Blackburn, head of restructuring at French Duncan, said the retail sector is grappling with serious infrastructure issues that will results in widespread store closures in Scotland if action is not taken. “The sector is not so much at breaking point as having gone beyond that and is simply collapsing,” said Ms Blackburn. “Without immediate action on rents and business rates many retailers will enter insolvency.”
Petition launched to reform pension rules for low earners
A petition has been launched to reform pension rules that see low-paid people lose out on £110m a year. Workers earning between £10,000, the point at which they are enrolled into a company pension, and £12,500, the point at which they start to pay income tax, miss out on tax relief on pension contributions because they are not actually paying tax. Their contributions effectively cost 25% more. An estimated 1.7m people in a net pay scheme – the one most usually offered to employees who have been auto-enrolled – will miss out this year on tax relief worth up to £64. About two-thirds are thought to be women.
Master of my fate; captain of my soul
Luke Johnson advocates starting up your own company if you want a rewarding job – but choose a career in banking if it’s the money you’re after. The chairman of Risk Capital Partners says: “Why do so many voluntarily embrace the entrepreneurial life, with all its seeming drawbacks? I think there are several reasons, but it is not really about making lots of money. Instead, entrepreneurs relish the autonomy and the ability to control their own destiny.” He then goes on to quote William Ernest Henley, who describes the spirit of adventure in his poem Invictus, thus: “I am the master of my fate/I am the captain of my soul.”
Deficit expected to creep up
Official data is expected to show public sector borrowing up slightly for May – by £79m to £4.15bn. Capital Economics UK economist Thomas Pugh said. “The downward trend in borrowing may not persist this year.” Phil Shaw, chief economist at Investec, added: “The underlying economy is not doing too badly … The fly in the ointment is the fiscal giveaways. It will soon show in the figures and two to three months are needed to get an idea of what the new trend will be.”
Sunday Express, Page: 43
Rising fuel costs drive up inflation
Figures due out this week are expected to show inflation climbed further above the Bank of England’s 2% target in May, driven by rising petrol prices. City economists expect an inflation rate of 2.2% for the month, up from 2.1% in April.
AI to take on a fifth of jobs
A report from KPMG and Harvey Nash forecasts the impact artificial intelligence will have on the jobs market, suggesting more than a fifth of roles will be overtaken by computers in the next five years. A survey of more than 4,000 technology leaders saw most respondents say that at least 10% of the workforce would be replaced by automated roles, with a third saying the rate would be 20%.
The Daily Telegraph, Business, Page: 5 City AM, Page: 6
Councils cut services spend but hold £22bn reserves
Official figures suggest local authorities in England have amassed huge cash reserves while budget cuts have driven a reduction in spending on services, reports the Times. Analysis shows that councils held £21.8bn of non-ring-fenced reserves last year, £5bn more than in 2017 and £11bn up on the total at turn of the decade, while spending on local services has fallen by about 21% since 2010. Elsewhere, the Yorkshire Post looks at local government funding, citing a PwC report which warns councils face a £51.8bn funding black hole over the next six years.
The Times, Page: 14 Yorkshire Post, Page: 11
Law firms which fail to adapt their culture face extinction
An FT editorial questions the wisdom of City law firms offering £100,000 to newly qualified solicitors as they compete with US firms. This risks driving a long hours culture which could backfire, the paper warns, with those discouraged going instead to more entrepreneurial and technology-driven firms as well as the Big Four’s legal operations. But Legal Cheek believes the theory does not fit the reality on the ground with money “talking more loudly among future lawyers than the FT realises.”
May’s £27bn spending booby trap for Boris
Theresa May is attempting to “bounce” Cabinet ministers into approving £27bn of funding for the education budget in a move seen as an attempt to stymie her successor’s own spending plans. The Treasury is reportedly resisting the three-year settlement plan while one minister said the “stitch up” was “a desperate attempt to rescue her reputation.” Treasury officials are displeased as they have a spending review due later this year and the Chancellor believes such a decision over the funding should be a decision for the next prime minister.
HMRC officials take 130 flights a day
New figures reveal HMRC staff are taking more than 130 flights each working day, more than officials in the Ministry of Defence, the Cabinet Office and the Ministry of Justice combined.
Contact Paul Southward.