News Roundup Tuesday 18th June 2019
News Roundup Tuesday 18th June 2019
Think tank calls for corporation tax cuts for those who boost wages
The cross-party think tank the Social Market Foundation (SMF) is to call on Conservative Party leadership hopefuls to go further than the corporation tax cuts so far proposed and only offer corporate tax cuts to firms that increase pay or training for young and low-paid staff. A report from the SMF cites a Japanese programme which saw companies raising wages by 3% or more paying corporation tax at 20% rather than 30%. The SMF said other options could include reducing business rates for firms promising to pay staff the living wage or more – £10.55 an hour in London or £9 elsewhere in the UK – or offering employers additional tax reliefs when they train low-paid staff. Elsewhere, Institute of Economic Affairs D-G Mark Littlewood asserts in the Times that: “The economic evidence – however awkward for elected politicians to present – is that in many areas, we can probably increase state revenues and even the proportion of this revenue contributed by the wealthy if the government is actually willing to reduce headline rates of tax. In numerous areas, we are very likely on the ‘wrong side’ of the Laffer curve.”
The Daily Telegraph, Business, Page: 3 The Times, Page: 41
Labour’s shock lifetime gifts tax plan
Several papers pick up on news that Labour is considering a “lifetime gifts tax” which would reduce the inheritance tax allowance to £125,000. The Labour-commissioned Land for the Many report claimed the move would raise £9.2bn more than the present system. But the party was accused of planning a massive tax raid on middle-class parents who help their children get on the housing ladder. Paul Scully, vice chairman of the Conservative Party, said: “This is yet another Labour tax raid in Corbyn’s war on homeowners.” Former Cabinet minister Priti Patel added: “Corbyn’s Labour have no respect for the millions of people across the country who work hard to provide economic security for themselves and their families. Labour’s disregard of people, their rights and freedoms is exactly why socialism never works and it will never work in Britain.”
The Times, Page: 20 Daily Mail, Page: 14 City AM, Page: 7
Woodford directors boosted by restructuring
Shifting Woodford Investment Management from an LLP to a limited company could have earned the company’s directors significant tax benefits, industry experts tell the Telegraph. However, the new structure would also have provided more flexibility especially when it comes to reinvesting profits and building up reserves. A Woodford spokesman said: “The change in status allowed the company to manage its capital more efficiently, provided a more flexible legal structure and improved corporate governance.”
Can today’s ultra-rich make peace with a wealth tax?
The FT looks at wealth taxes in various countries and those proposed for the US. The paper goes on to explain how a net wealth tax favours those who deploy their assets more productively.
Campaign group demands global firms come clean on their environmental impact
Global companies with a combined worth of more than $15trn lack transparency over their effect on the environment, according to investor alliance group CDP, formerly known as the Climate Disclosure Project. Many of the companies on a list of over 700 report on their environmental impact in their own sustainability reports but the CDP claims this is insufficient because their reports do not use standardised data. The number of major investors backing CDP has grown to 88, from 57 two years ago and includes HSBC, Investec, asset managers Candriam and Amundi, as well as Cathay Financial Holdings and the Washington State Investment Board. Amazon, Tesco and ExxonMobil are among the majors targeted by CDP along with UK high street brands including Tesco, Ocado, WH Smith, Marks & Spencer and JD Wetherspoon.
Only way is up for Aberdeen
The latest SME health check index, by Clydesdale Bank owner CYBG, found Aberdeen had been particularly hit by the oil and gas downturn between 2014 and 2018, leading to just 1% growth in start-ups over the period – the lowest in the UK. The report also found falling sales and confidence levels among Scottish SMEs in the first quarter of this year mean they now have the weakest business confidence of anywhere in the UK. However, business leaders said the region was picking up. Callum Gray, corporate finance director at Anderson Anderson & Brown, said: “We note that while confidence across the oil and gas sector is improving, these businesses often experience a timing lag so we would anticipate an improvement in their trading performance as the year goes on.”
The Press and Journal, Page: 27
Surge in buy-to-let fuelled by Labour’s raid on pensions
A report from the Resolution Foundation claiming the buy-to-let boom was reducing the number of homes available for young people to buy has been widely criticised. The left-leaning think tank said the number of Britons with second homes had soared to 5.5m since 2001, with their extra homes rising in value from £610m to £941m over the period. But critics of the report point out that the rise in buy-to-let purchases was down to the Blair – Brown Labour government destroying final salary pensions in the private sector, prompting people to look after their own retirement needs by buying second properties to let. The Mail’s Alex Brummer says the foundation’s report “offers yet another chilling glimpse of Labour thinking on property ownership.”
Daily Mail, Page: 15, 18
Bank of mum and dad set to hand out £6.3bn in loans
A survey by Legal and General and the Centre for Economics and Business Research (Cebr) suggests parents will hand out £6.3bn worth of loans this year in a bid to help their children get on the property ladder. It found that parents are expected to be involved in more than a quarter of a million (259,400) property purchases this year.
The Independent, Page: 10 The Sun, Page: 26
Rise of the CVA heralds greater change
The use of CVAs by retailers to restructure store estates has led to the loss of nearly a thousand shops over the past two years, according to new research by property group Colliers International. But Eugene Klerk at Credit Suisse says the threat to high street jobs will only get worse as consumers migrate to more convenient and cheaper ways of buying goods and services.
The Daily Telegraph, Business, Page: 1
More doctors retiring early following pension crackdown
New figures show that the number of doctors taking early retirement has almost tripled following a clampdown pension allowances. A spokesman said the Department of Health and Social Care would be “consulting on proposals to make NHS pensions more flexible for senior clinicians, in response to evidence that shows this issue is having a direct impact on retention and front-line service delivery.”
The Daily Telegraph, Page: 1, 2 The Sun, Page: 11
France to scrap €1bn of tax breaks for companies
The French government is planning to scrap €1bn of tax breaks for companies to help fund a pledged €5bn reduction in personal income taxes. The remaining €4bn will be financed through lower spending. Budget minister Gerald Darmanin said 95% of taxpayers would see a reduction in their income taxes from January next year.
City AM, Page: 11
Business investment expected to contract
The British Chambers of Commerce (BCC) has forecast 1.3% growth for the UK economy in 2019, up marginally from the 1.2% it predicted earlier, due to what it described as “exceptionally rapid stock-building early in the year”. However, the BCC has downgraded its growth forecast for 2020 to 1% from 1.3% and to 1.2% from 1.4% in 2021 as the unwinding of historically-high inventory levels coupled with weaker business investment weigh on economic activity. “The continued Brexit impasse, including the growing possibility of a no-deal exit, together with the high upfront cost of doing business in the UK and the running down of excess stock, is expected to suffocate investment activity over the near term,” the business group warned.
City AM, Page: 6 The Independent, Page: 52, 53 Yorkshire Post, Page: 4 The Scotsman, Page: 34
Motor insurers must brace for possible downturn
Reforms to the size of whiplash claims and possible tighter pricing regulations in the future are likely to keep insurance premiums down, says EY’s Tony Sault good for car owners, but insurers will “need to differentiate their propositions and take advantage of the latest technologies to help drive down costs and improve their customer offerings.”
Spurs to pay highest business rates of any UK stadium
Tottenham Hotspur’s new £1bn stadium will have the highest business rates bill of any football ground in the country. The north London club will be forced to pay £3.7m in rates this year, more than any other club in the UK, after tax officials said the ground had a rateable value of £7.19m.
The I, Page: 41
Contact Paul Southward.