News Roundup Monday 1st July 2019
News Roundup Monday 1st July 2019
Duchess will have to file US tax return or renounce nationality
The Duchess of Sussex could be barred from re-entering the US under legislation allowing the country to exclude tax “refugees”. The US government has started enforcing provisions to a 1986 rule targeting Americans who drop their citizenship to avoid paying US tax on earnings they make overseas. Boris Johnson, who left the US at the age of five, renounced his US citizenship in 2016. He had to pay tax to the US on the profit he made on the sale of his home in London, which he described as “outrageous”. Other notable renunciants include Eduardo Saverin, co-founder of Facebook and John Dorrance III, the heir to the Campbell’s soup empire. Paul Miller, the owner of New York-based accountancy firm Miller & Company, said he doubted whether the US would grant the Duke and Duchess’ son Archie exemption because of his royal status. “The US government is greatly in debt. They want every penny they can get,” he said.
Apple pays £3.8m tax on £1.2bn UK sales
Apple’s tax bill from its British shops fell by more than 60% to just £3.8m last year. Pre-tax profits rose to £33.7m, although sales fell by £23m to £1.2bn in the year to the end of last September. Apple’s tax bill from its 38 British stores has steadily fallen from a high of £13.8m in 2016. Apple Europe, Apple UK and Apple Retail UK published accounts at Companies House yesterday. Combined sales were more than £2bn with profits at £425.8m. Apple said it paid the 19% corporate tax rate, but adjustments reduced that to 16.6%. Apple handed itself a £313m dividend from UK subsidiaries.
The Sunday Times, Business, Page: 3 The Mail on Sunday, Page: 102
Hunt promises to leave the EU with optimism and confidence
Jeremy Hunt and Liam Fox promise in a piece for the Sun that they will seek to negotiate a comprehensive Canada-style free trade deal with the EU, but if no progress is evident by the middle of October “we will press ahead with No Deal”. They say: “We intend to leave the EU with optimism and confidence. Britain can walk tall in the world with the lowest corporation taxes to attract business, a £15bn boost for our armed forces and a competitive free trade policy.”
The Sun, Page: 15
Pension freedoms see over-55s ‘overtaxed and overcharged’
A report commissioned by Age UK claims the government has raked in £2bn more in tax than was predicted since pension freedom took effect in 2015. The charity also warned that about 150,000 people are paying between £40m and £50m a year combined in unnecessary fees because they are invested in a fund with an annual charge higher than 0.75%. Caroline Abrahams, Age UK’s charity director, said: “We’re worried a lot of people are making risky decisions that could leave them in a mess in a few years’ time. The government and the FCA need to take a far more proactive approach to ensuring that these consumers get a good deal, so that if and when a market storm hits, it does not destroy public trust in pensions.”
Many employees are auto-enrolled into poor performing funds
Millions of workers who are saving through workplace pensions are getting poor returns because they have been automatically enrolled in a low-risk default fund, according to a new study. Some master trusts are returning 56% less over five years than the best-performing funds. However, Pensions minister Guy Opperman, who wrote a foreword to the research, said it was early days for auto-enrolment. “I encourage no one to lose their heads on immediate short-term differences in investment returns,” he said. “Still, this is clearly something employers and their advisers will wish to monitor closely, both by looking at risk-adjusted returns and whether that level of risk is appropriate for their people.”
Final salary pensioners may see income limits halved
Experts are predicting that the Government will change lifetime allowance rules in order to recoup the losses from the public sector pensions dispute it recently lost. The Supreme Court said on Thursday that the Treasury could not fight a ruling that it had discriminated against younger workers when it changed public sector pensions four years ago. Alistair Cunningham of Wingate Financial Planning suggests the Government will try to recover the £4bn cost of this loss by reducing the annual income needed to breach the lifetime allowance to around £25,000, down from £50,000.
The Sunday Telegraph, Business, Page: 9
Diligent small businesses beat productivity gloom
The Sunday Times looks at the efforts small businesses are making to improve productivity ahead of figures due this week showing a 0.2% fall in productivity for the first three months of the year, the third consecutive quarter of decline. The ONS estimates that 90% of the least productive companies employed fewer than 10 people and although some responsibility rests with founders, some experts say ineffectual government initiatives and a lack of advice on how to improve are also to blame. Tony Danker of Be the Business, a productivity campaign backed by the Government, says it is the small business owners “with commitment, expertise and planning who are getting the yield.”
EIS fund warns investors stocks are worthless
Oxford Capital Infrastructure EIS, a £350m fund that invests in solar panels, anaerobic digesters and energy storage, has warned its clients that many investments have been rendered worthless. The fund, which services an estimated 1,000 high-net-worth clients, blames a series of “legislative and regulatory changes, as well as operational challenges”.
The Sunday Telegraph, Business, Page: 1
NatWest steps up digital services
NatWest is expanding its digital services for small firms, with the launch of a fast credit alternative to the traditional business overdraft and a new video banking channel. Rapid Cash will offer credit based on a firm’s unpaid invoices up to £300,000.
Sunday Express, Page: 44
Trustees plan buyout of £10.5bn British Steel pension scheme
The trustees of the British Steel Pension Scheme are in discussions with a number of insurance giants about a buyout of the £10.5bn scheme. Rothesay Life, which last year acquired a £12bn annuity portfolio from Prudential, is understood to be among the interested parties along with L&G and Pension Insurance Corporation.
Woodford-backed tech firm fails
Yorkshire-based 3D printing firm Metalysis has collapsed into administration. The company was backed by Neil Woodford’s Equity Income Fund and his Patient Capital Trust. Grant Thornton is searching for a buyer for Metalysis.
The Mail on Sunday, Page: 102
Figures indicate second quarter contraction
Figures out this week are expected to show a contraction in the UK economy for the first time in six years. The June Markit/CIPS purchasing managers index (PMI) scores for the manufacturing and construction sectors will come in at 49.3 and 49 respectively (a score above 50 indicates growth) while the score for services is expected to rise slightly by 0.3 points to 51.3. Howard Archer, chief economic adviser to the EY ITEM Club, said: “I can’t see much improvement in June, manufacturing is contracting as stockpiling unwinds, which restricts demand, and export demand is pretty weak. I suspect construction will show contraction, although services is likely to hold up.” He added: “Overall, the June PMI numbers point to a stagnating economy, my best guess is that GDP contracts by 0.1 to 0.2% in the second quarter.”
Sunday Express, Page: 43
Private sector sees output plunge
Research by the CBI reveals Britain’s private sector has experienced the sharpest fall in activity for seven years over the past three months. Its latest growth indicator shows distribution volumes fell at the fastest pace since August 2009, while the services sector saw the sharpest drop in activity since December 2012.
Goldman draws up list of stocks at risk from Corbyn
The Sunday Telegraph reports on a list of seventeen stocks drawn up by Goldman Sachs which are trading at a 10% discount because of their exposure to a possible Corbyn-led Labour government. The bank’s basket of election risk stocks includes companies Labour has vowed to nationalise, UK-focused banks and firms that are reliant on government contracts, such as defence or outsourcing shares.
Contact Paul Southward.