Sunak plays down wealth tax talk

Chancellor Rishi Sunak has suggested that a one-off wealth tax may not be his preferred option as the UK looks to rebalance the books in the wake of the coronavirus crisis. With the Wealth Tax Commission having proposed a 1% tax on those with personal wealth of more than £500,000 – which would be spread over five years, Mr Sunak has addressed the matter in an interview with the Spectator. Responding to the suggestion that a one-time wealth tax did not sound like a Conservative policy, the Chancellor said: “I think that’s right, in the sense that we’re a party that believes in aspiration. Actually, we should be celebrating aspiration.” Mr Sunak did note, however, that he is yet to read the Wealth Tax Commission report. While the commission says such a levy would raise £260bn, the Telegraph highlights that critics have warned it would punish asset-rich, cash poor families and could force some people to sell their homes.

The Daily Telegraph, Business, Page: 1

Chancellor urged to extend tax return deadline

The Chancellor has been urged to extend the self-assessment tax return deadline beyond January 31, with concern that people will need more time to analyse their finances in greater detail due to the impact of the coronavirus outbreak. Moore has asked the Chancellor and HMRC to give taxpayers at least an extra month to deal with their tax return. The firm’s Tim Woodgates said pushing the deadline back is “essential to avoid causing more anxiety and stress” to those who are shielding, adding that a “blanket extension is the best option”. Noting that late-payment can result in fines, Mr Woodgates said HMRC is “snowed-under” and will not have enough time to deal with appeals against penalties “without falling behind elsewhere.” “Compared to overall tax take, the penalties for late filing are immaterial,” he added.

Daily Express


Loan schemes hold off insolvencies

The Independent’s Ben Chu says that while large numbers of firms have been hit financially by the coronavirus crisis, the number of business insolvencies has fallen this year, with this in large part thanks to state-backed bank loans. Colin Haig of restructuring trade body R3 says the reason the impact of the pandemic “hasn’t shown up in the insolvency statistics yet is because of the extensive support the government has provided”. He adds: “Without it, we’d be in a very different situation – and a very grave one at that.” Mr Chu highlights that across a number of Government loan schemes, 1.5m firms have tapped £65bn of credit, while Bank of England figures show that net bank lending to SMEs in the year to October was more than 40 times higher than the average of previous years. With the Bank saying further support will be needed, the Treasury is working on a successor to the loan schemes. Mr Chu warns that if officials make the new scheme considerably more rigorous, many firms could find themselves facing insolvency.

The Independent, Page: 49


Pandemic hits self-employed numbers and earnings

The Telegraph’s Jon Yeomans looks at the impact the coronavirus crisis has had on Britain’s self-employed workers, noting that while the number of freelancers peaked at 5m in March, the pandemic has seen the total fall 9% to 4.56m in October. Figures from IPSE, the professional body for self-employed workers, show earnings for self-employed workers fell 25% in Q2, with the nationwide lockdown hitting incomes. While HMRC analysis says 2m freelancers had utilised Government support to the tune of £5.1bn by August 31, campaign group Excluded UK calculates that 1.6m self-employed people have missed out as they did not meet the eligibility criteria.

The Daily Telegraph, Business, Page: 4

Migrants led jobs boom

Analysis shows that migrants have driven a jobs boom in economic hotspots in the last 20 years, with analysis by the Resolution Foundation think-tank showing that migrant workers accounted for 67% of net employment growth in the South East, 74% in the West Midlands and 107% in Outer London. Policy analyst Kathleen Henehan said: “Migrant workers played a big role in growth of the UK labour force over the last 25 years.” She highlighted that the UK has been attracting fewer migrant workers since the Brexit referendum, adding that the new immigration regime “will reinforce this major change for the UK labour market.”

Daily Mirror, Page: 2


House prices climb 5.4%

Data from the Office for National Statistics shows that property prices rose by 5.4% year-on-year in October, up from a 4.3% increase recorded in September. The increase, which was driven by a surge in buyers looking to complete deals before the stamp duty holiday comes to an end on March 31, pushed prices to a record average of £245,000. Scotland led the way on price rises, with the average climbing 6% to £163,000. Prices in England, Wales and Northern Ireland grew 5.4%, 5.8% and 2.4% respectively. EY Item Club believes house prices could fall by 5% over the first half of 2021, “before activity gradually improves” over the second half of the year. It said this will “allow prices to stabilise and then start to firm” as the economy “establishes a firmer footing”, noting that very low borrowing costs should help, with the Bank of England unlikely to lift interest rates from 0.10% during 2021. PwC economist Jamie Durham warned that there is a risk activity “could drop off sharply” once the stamp duty holiday comes to an end.

Daily Mail The Guardian Financial Times


Soap star’s firm wound up

Thatcher Promotions Limited, a company owned by EastEnders actress Jessie Wallace has been wound up owing the taxman £40,000. The firm was placed into voluntary liquidation in 2015, owing almost £70,000 in unpaid corporation tax and VAT. Ms Wallace, the only director of the firm, paid £60,000 but with some of this going on legal fees and to pay the liquidator, there was only £27,000 left to pay what was owed in tax.

Daily Mirror, Page: 9


Inflation falls to 0.3% in November

Inflation fell to 0.3% in November from 0.7% in October, Office for National Statistics (ONS) figures show. Discounting by clothing retailers helped pushed the consumer prices index down, with bigger discounts than usual offered on Black Friday. ONS deputy national statistician for economic statistics Jonathan Athow noted the impact of the “significant restrictions” in place across the UK. PwC economist Hannah Audino commented: “The acceleration of consumer price growth over the past two months has been cut short”, noting that “most of the main groups of goods and services experienced a fall in prices between October and November”. Yael Selfin, chief economist at KPMG, believes that prices could rise in the coming months, with “border frictions” as a result of Brexit driving up prices. She added that if a Brexit deal is agreed, inflation could rise to an average of 1.3% next year from 0.9% in 2020. Howard Archer, chief economic adviser to EY Item Club, believes consumer price inflation is likely to “edge back up” through December and in 2021.

The Guardian The Independent Financial Times Daily Mail City AM BBC News

Businesses return to growth

UK businesses have returned to growth this month following a downturn driven by the England-wide lockdown in November, with the IHS Markit purchasing managers’ index (PMI) climbing to 50.7 in December from 49 in November on an index where a figure above 50 indicates expansion. Manufacturing led the way, with the sector’s PMI reading hitting a three-year high of 57.3, while the services sector, which makes up about 80% of the economy, saw a reading of 49.9. Chris Williamson, chief business economist at IHS Markit, said the PMI data suggests the blow dealt to the economy by the second wave of coronavirus infections “has so far been far less harsh than the first wave.” However, he added that the recovery “lacked vigour”.

City AM Financial Times

Chancellor: Borrowing not sustainable

With Government borrowing hitting more than £22bn in October, Chancellor Rishi Sunak says current levels are unsustainable. Office for National Statistics data shows that between the start of the financial year in April and October, the state borrowed £215bn, with this driven by the coronavirus crisis and the cost of the Government’s response. Mr Sunak has told the Spectator: “It is clearly not sustainable to borrow at these levels. I don’t think morally, economically or politically it would be right.”

The Daily Telegraph, Business, Page: 1


Ministers urged to ease in new border rules

Blick Rothenberg has urged the Government to introduce an implementation period for post-Brexit border rules, arguing that businesses still know very little about what the new procedures will be as a deal is yet to be agreed with the EU. The firm’s Alex Altmann said: “With the end of the customs union being two weeks away the Government need to show flexibility now”.

The I, Page: 15


Accountant reprimanded

Accountant James Phipps has been given a “severe reprimand” and ordered to pay £5,060 after a tribunal heard he groped a sleeping woman on a flight then threw a hardback book at her when she rejected his advances. He was arrested over the incident and given a ten-day jail sentence in 2019. While he lost his job with PwC, he was not struck off as the Institute of Chartered Accountants accepted his argument that it was an “isolated incident”.

The Daily Telegraph, Page: 13 The Times, Page: 19

Contact Paul Southward (Tax Consultant)

Paul Southward