News Roundup Thursday 30th May 2019

NEWS ROUNDUP

TAX NEWS

IFS: Tax system helps reduce wealth inequality

The Institute for Fiscal Studies (IFS) says the UK tax system helps reduce wealth inequality in the country. The IFS report shows that the top 20% of earners had an income 12 times that of the bottom 20% before taxes and benefits took effect, with this dipping to five times afterwards. While benefits account for the majority of that narrowing of the inequality gap, the role of taxation was noted. Shadow Chancellor John McDonnell said the study shows the Government is wrong to plan tax cuts, commenting: “The IFS has confirmed the importance of taxation and social security in creating a fairer society.” The findings, funded by the government-backed Economic and Social Research Council, contradict an Office for National Statistics report published in 2018 which said the tax system has a “negligible effect on income inequality”. Pascale Bourquin, a research economist at the IFS said: “The tax and benefit system significantly reduces the gap between rich and poor, with benefits playing a particularly big role. However, contrary to the ONS’s claim, taxes do also reduce inequality.”

The Times, Page: 38 Financial Times, Page: 2 The Times, Page: 38 The Guardian, Page: 32 The Independent, Page: 50 I, Page: 8 Daily Mail, Page: 14 The Scotsman, Page: 22 Yorkshire Post, Page: 4

Raab: There is room to cut taxes

Tory leadership hopeful Dominic Raab has said he wants to reduce the basic rate of income tax from 20p to 15p and raise the national insurance threshold. He refuted a claim that this could mean a £30bn hit for the Treasury, saying the initial increase was likely to cost £15bn. He told BBC One’s Andrew Marr Show: “We have got £26bn worth of head-room within our deficit target.” He said the “great work” of Chancellor Philip Hammond and previous chancellors means there is what Mr Hammond calls the “luxury of choice” with what ministers do with that head-room, “including cutting taxes for working families.”

The Independent, Page: 4 Daily Mail, Page: 9 The Daily Telegraph, Page: 4 Daily Star

Corbyn and tax

Tom Stevenson of Fidelity International considers what a Labour government under Jeremy Corbyn could mean, highlighting Labour’s stated policy to reinstate the 50% additional rate for top earners and to introduce a 45pc rate for those earning £80,000. Writing in the Daily Telegraph, he also says pension tax relief for higher-rate taxpayers “is very unlikely to survive.” Elsewhere, the Mail questions Mr Corbyn’s stance on taxation. It notes that the top 1% of taxpayers account for 28% of income tax, commenting: “Hammering the rich will drive them abroad, meaning they pay less tax – forcing the less wealthy to foot the bill.”

The Daily Telegraph, Business, Page: 2 Daily Mail, Page: 16

UK tourist tax will only work with hotel VAT cut, warn MPs

A report from the All Party Parliamentary Group for Hospitality says the introduction of a tourist tax “must include a significant reduction in VAT on hotels”.

Financial Times, Page: 2

CORPORATE NEWS

Restaurants serve up lower profit

Analysis conducted by UHY Hacker Young shows that pre-tax profits at the UK’s top 100 restaurant groups – as measured by turnover – fell from £345m in the first quarter of 2017 to £102m in the first three months of 2018. Of the top 100 restaurant groups, figures show 48 are loss-making, up from 37 last year.

The I, Page: 40

Monsoon in rent reduction move

The Telegraph’s James Cook looks at reports that fashion chain Monsoon Accessorize is seeking to negotiate rent reductions with landlords in an effort to avoid store closures. He notes PwC figures showing that the number of retailers entering CVA deals has doubled since 2016. On the climate for fashion retailers, Mr Cook points to another PwC study which reveals that 28% of 18 to 24-year-old shoppers plan to reduce spending on clothes rather than any other category. The Guardian also looks at Monsoon Accessorize founder Peter Simon’s plan to invest £34m in the business to help convince landlords to agree to rent cuts. It notes that Deloitte was hired in April to help the retailer secure a CVA.

The Daily Telegraph, Business, Page: 3 The Guardian, Page: 29

British Steel sale hangs in balance

The FT reports that efforts to find a buyer for British Steel could be abandoned “within a few months.” The Official Receiver is working alongside EY to seek a buyer. Analysing the impact of British Steel’s collapse, the paper says that accountants have noted a 20% increase in the number of building firms going into administration following the receivership of Carillion last year.

Financial Times, Page: 11 Financial Times, Page: 11

Investors take on bosses big pensions

The FT looks at executive pensions, noting PwC research showing that 47% of the FTSE 100 companies with a calendar year-end for annual reports have adjusted pension contribution rates for new executives.

Financial Times, FT Fm, Page: 10

Cash boost awaits promoted sides

Analysis by Deloitte suggests teams promoted to the Premier League could see revenue reach £300m over five years if they survive their first season in the top flight. With the Championship play-off between Aston Villa and Derby County taking place today, Deloitte says the winners will earn at least £170m.

The Daily Telegraph, Page: 26 Yorkshire Post, Page: 15

150 jobs saved in café pre-pack

Café chain Filmore & Union Group has closed eight sites. Phil Pierce and Paul Whitwam at FRP Advisory were appointed joint administrators, with 150 of 230 jobs saved as a result of a pre-pack deal.

Yorkshire Post, Page: 8

SMEs NEWS

Burnout hits half of SME bosses

A poll by accounting software firm FreeAgent shows that 53% of small business owners have experienced burnout as a result of working too hard.

The Daily Telegraph, Business, Page: 8

OTHER NEWS

Charity fraud hits £2.5bn

A report from Crowe and the University of Portsmouth’s Professor Jim Gee shows that fraudsters stole a record £2.5bn from UK charities last year – up £200m on the year before. The statistics, revealed in BBC One series Britain’s Secret Charity Cheats, show that around a quarter of the £10bn a year donated by the British public is lost to fraud.

Daily Mail, Page: 13

Contact Paul Southward.

Paul Southward