NEWS – THURSDAY 18TH FEBRUARY 2021

NEWS ROUNDUP

TAX NEWS – THURSDAY 18TH FEBRUARY 2021

IHT reclaims hit six-year high

The number of Inheritance Tax (IHT) reclaims reached a six-year high in 2020. Figures released by HMRC following a Freedom of Information request by financial advisers NFU Mutual show there were 6,262 reclaims in 2020. This marks an increase on 2019’s total of 5,499. Analysis of the data shows that there were a total of 4,419 reclaims on loss of property value, nearly 600 more than 2019. There were also 1,843 reclaims for shares sold at a lower value – a small increase from 2019’s tally. Sean McCann of NFU Mutual said the figures show more people are becoming aware they can reclaim overpaid IHT.

Daily Express

Taxes set to settle pandemic bill?

The Independent’s Ben Chu says policymakers and analysts are considering whether tax rises will be required to cover the cost of the coronavirus crisis, with emergency support measures and a pause on collecting certain taxes hitting state coffers. He says Chancellor Rishi Sunak is examining the case for future tax increases, with corporation and capital gains levies said to be potential targets and a new digital sales tax possible. Mel Stride, chair of the Treasury Select Committee, has this week suggested a one-off wealth tax may be the way to go, with a Wealth Tax Commission report suggesting such a levy would delay permanent tax rises.

The Independent

MPs: Tax rethink can drive a green recovery

The Environmental Audit Committee has suggested tax cuts could help drive a greener Britain, arguing that a reduced VAT rate could incentivise businesses and households to reduce carbon emissions. Committee chair Philip Dunne said a tax system “fit for net-zero Britain is key”, adding that it will “encourage innovation, give confidence to the sector and support companies to make the low-carbon transition.” The MPs also urged ministers to “begin scoping work on a carbon tax” in an effort to propel a green recovery from the coronavirus pandemic.

The Independent Daily Express

CORPORATE NEWS – THURSDAY 18TH FEBRUARY 2021

Small chains and vacant sites targeted by expanders

City AM says the UK’s bigger pub and restaurant chains – as well as private equity firms – are circling smaller chains and vacant properties, looking to snap up expansion opportunities at a discounted price during the pandemic “and reap the rewards when the industry bounces back”. It cites figures from restructuring firm Resolve showing that between September and December 2020 there were 28 M&A transactions in the hospitality sector, a 75% increase on Q3. The paper also notes that a moratorium on landlords evicting commercial tenants ending could see a surge in company collapses, with Begbies Traynor’s Julie Palmer expecting a spike in the number of firms “showing significant distress and the number of businesses that start to fall away”.

City AM

£176m hit for Arcadia creditors

Topshop and Topman creditors are facing losses of £176m as the Arcadia retail empire is wound up, more than double a previous estimate. Analysis shows that creditors are owed £219m in total but there are only £42.4m of assets available to pay them. The figure falls far below a November estimate by administrator Deloitte, which suggested £82.2m was owed to creditors – although the firm warned that the true amount would be much higher.

The Daily Telegraph, Business, Page: 1

SMEs NEWS – THURSDAY 18TH FEBRUARY 2021

FSB: Support overlooks 1m small firms

The Federation of Small Businesses (FSB) has warned that a million small businesses and sole traders “overlooked” for emergency coronavirus support need assistance, with one in five small companies missing out due to the way assistance has been targeted. An FSB poll of more than a thousand small business owners saw one in five said they have received no financial help from the Government amid the pandemic, while separate FSB research suggests one in two firms have not been able to gain access to a cash grant and only one in twenty had received discretionary help from their local authority. The federation has urged the Chancellor to extend cash grants and business rates reliefs and called for the threshold at which businesses start paying rates to be permanently increased. FSB national chairman Mike Cherry said that while too many small firms have been left out of support measures, “it’s not too late to bring those left out into the fold.”

The Times, Page: 36

EMPLOYMENT NEWS – THURSDAY 18TH FEBRUARY 2021

Lockdown leaves 2m without work

A report from the Resolution Foundation think-tank says close to 2m people have been unable to work for at least six months after losing their jobs in the pandemic or being placed on furlough. Its calculations put the total at 1.9m, far steeper than official statistics showing a total of around 1.2m. The report says 700,000 workers had been unemployed for at least six months in January and a further 500,000 had been on full furlough, working no hours at all, for the same period. The Resolution Foundation says one in five of the people not working fear they will remain jobless or their roles will vanish when the furlough scheme stops on April 30. Meanwhile, a survey by the British Chambers of Commerce found one in four companies will have to lay off staff unless furlough support is extended beyond April 30.

Daily Mail Financial Times

Ministers sceptical over unconscious bias training

Michael O’Dwyer in the Telegraph says ministers are sceptical over whether focusing on unspoken prejudices will improve workplace equality, highlighting that unconscious bias training sessions for civil servants in England were scrapped last year. Michael O’Dwyer notes that during a controversial virtual meeting which led to his departure, KPMG chairman Bill Michael said there is “no such thing as unconscious bias” and suggested that “after every single unconscious bias training that’s ever been done, nothing’s ever improved.” This, Mr O’Dwyer says, shows that ministers’ doubts about unconscious bias training “are mirrored in some boardrooms” – even if directors do not voice the opinion publicly for fear of drawing criticism. It is noted that KPMG has offered unconscious bias training to its staff, while PwC made sessions mandatory following 2020’s Black Lives Matter protests.

The Daily Telegraph, Business, Page: 5

PROPERTY NEWS – THURSDAY 18TH FEBRUARY 2021

House prices up in December

House prices saw the strongest growth in six years in the final month of 2020, figures from the Office for National Statistics show. House prices were up 8.5% year-on-year in December, hitting an average of £252,000. This compares to growth of 7.1% in November and is the highest annual growth reading since October 2014. Wales saw the highest growth, with prices rising 10.7% to an average of £184,000, followed by England with an 8.5% increase taking the average to £269,000. The increase in the UK average seen toward the close of 2020 has been driven by pent-up demand amid the initial lockdown and the stamp duty holiday, with analysts saying demand and prices may wane as the tax relief comes to an end at the end of March. Howard Archer, chief economist of EY Item Club, said elevated housing market activity and robust prices “will prove unsustainable sooner rather than later” and predicted that prices will fall by around 5% this year.

Daily Mirror, Page: 46 City AM

London prices dip

London’s mini property boom came to a halt in December, official figures show, with prices seeing their biggest monthly fall since the market reopened in May. The average cost of a home in the capital was down 1.1% in the month to £496,066, according to data from the Land Registry. The dip dragged the annual growth rate down from 7% in November to 3.5% in December. Property experts said the shift was likely to be caused by buyers abandoning transactions, believing they would miss March’s stamp duty holiday cut-off.

Evening Standard

ECONOMY NEWS – THURSDAY 18TH FEBRUARY 2021

Inflation up to 0.7%

Inflation rose in January, with Office for National Statistics data showing the consumer prices index rose to 0.7% last month – up from 0.6% in December. The increase came as food retailers pushed up prices and furniture retailers and household goods stores did not offer the level of discounting seen in previous years. Andy King, the head of consumer price inflation at the ONS, said the end of the Brexit transition period did not appear to have had a noticeable impact on prices, despite border disruption. Some experts have warned that inflation could exceed the Bank of England’s 2% target by the end of 2021. Samuel Tombs of Pantheon Economics said January’s increase “marks the first step this year towards an above-target rate by the autumn”, while Karen Ward of JPMorgan Asset Management said inflation is expected to be at 2% by year end “but it could be higher than that”. Fidelity International’s Ed Monk said the outlook for prices is “pretty confusing”, adding: “It will take a few months and an ending of current restrictions for the full picture to emerge”. PwC’s Hannah Audino says renewed demand in service sectors hit by restrictions and the end of VAT cuts could see an increase in prices, while an expected increase in unemployment as the furlough scheme ends “will increase spare capacity in the labour market and subdue wage growth, putting downward pressure on prices”.

The Guardian Daily Mail BBC News Sky News

Scottish shop sales fall in January

New figures from the Scottish Retail Consortium (SRC) show total shop sales north of the Border fell year-on-year by almost 28% in January. This marks the worst monthly performance since April and the worst January reading on record. KPMG’s head of retail Paul Martin said fresh coronavirus restrictions have left retailers to “contend with another month of empty high streets”, adding that poor weather exacerbated the issues, “creating a perfect storm”.

BBC News

OTHER NEWS – THURSDAY 18TH FEBRUARY 2021

Business travel unlikely to take off again

Jonathan Hinkles, chief executive of airline Loganair, has warned that business travel is unlikely to return to 2019 levels in the aftermath of the coronavirus crisis, saying that in the medium term he expects a recovery of around 60-65%. Speaking to the Independent after a speech to The Aviation Club UK, he said that while some sectors will see a 90%-plus recovery in business travel, across sectors like accountancy and consulting, the rate will be as little as 25-30%.

The Independent

Michael’s stance supported

Leo McKinstry in the Express reflects on the news that Bill Michael, UK boss of KPMG, has been forced to stand down after telling staff to “stop moaning” about the impact of the pandemic. Mr McKinstry sides with Mr Michael, arguing that “the ability to cope with adversity is not built by mollycoddling, but by a sense of perspective.” Stephen Glover in the Mail says Mr Michael “was doomed” after such “straight-talking”, adding that following criticism of his comments, he “quickly stepped down, apologising profusely as is obligatory after any show trial.”

Daily Express, Page: 12 Daily Mail, Page: 19

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Paul Southward