NEWS – THURSDAY 19TH NOVEMBER 2020

NEWS ROUNDUP

TAX NEWS – THURSDAY 19TH NOVEMBER 2020

MPs told wealth tax would be costly and complex

Experts have told MPs that a wealth tax would be inefficient and difficult to impose. With a wealth levy among possible options as the UK looks at ways to cover the cost of the coronavirus crisis, analysts have told the Treasury Select Committee that a tax on the value of property, pensions and assets is likely to be counterproductive, saying that such policies have often proven unsuccessful in other countries, with many nations eventually abandoning them. Sir Edward Troup, a former first permanent secretary at HMRC, warned that calculating the wealth to be taxed would prove extremely difficult, telling the committee that while a wealth tax is possible, it would be complex and expensive, adding that it is unclear whether the resources it would require would “justify whatever you would raise from it.” Barrister Emma Chamberlain commented: “I am not sure we want to turn our nation into a nation of bookkeepers and valuers, which an annual wealth tax may well force us into,” while Arun Advani at the University of Warwick suggested ministers would be better off focusing on reform of inheritance and capital gains taxes, dismissing a wealth tax as “a poor second best”.

The Daily Telegraph, Business, Page: 3

Treasury defends tax-free shopping plan

Treasury Minister Kemi Badenoch has defended plans to scrap tax-free shopping once Britain leaves the EU, saying keeping VAT-free shopping in place would see the UK handing visitors from the EU a subsidy of almost £1bn-a-year. With business leaders questioning the Treasury’s decision, saying it will lead to job losses and cost the economy £3.5bn, the Treasury Select Committee has turned its attention to the matter. In a letter to committee chair Mel Stride, Ms Badenoch said that leaving tax-free shopping as it currently stands would mean visitors from the EU will be able to reclaim VAT on goods, resulting in a “deadweight loss” by subsidising their spending. While the VAT retail export scheme costs HMRC around £500m-a-year, Ms Badenoch said extending it to EU citizens would drive the annual bill to £1.4bn, an increase of £900m.

The Daily Telegraph, Business, Page: 3

Proposed CGT shift worries entrepreneurs

Sam Smith, CEO of stockbroker finnCap, says some business owners and entrepreneurs are looking to sell their companies ahead of a potential increase in capital gains tax (CGT). Pointing to recommendations in an Office of Tax Simplification review which suggests cutting CGT allowances and aligning the tax more closely with income tax rates, Ms Smith said: “Companies will move out of Britain if CGT on selling your business fundamentally changes.” Noting that people are nervous about a potential reform of CGT, she said some businesses have started to move overseas already. She added: “We think the reward for investing in a business needs to be recognised in tax rates.”

The Daily Telegraph

Scotland unlikely to see tax hikes

Finance Secretary Kate Forbes says people in Scotland are unlikely to face tax rises or fresh austerity cuts in the upcoming budget, telling MSPs that “now is not the time” to raise taxes. Ahead of her 2021/22 budget, which is to be published in January, she told Holyrood’s finance committee that think-tanks broadly agree that “now is not the time for fiscal consolidation.” Ms Forbes also said the relative performance of Scottish taxation compared with the rest of the UK was “critical”.

The Scotsman, Page: 4

CORPORATE NEWS – THURSDAY 19TH NOVEMBER 2020

Multinationals pull back on UK investment plans

Analysis from EY shows that just 43% of overseas multinationals are pursuing UK investments planned before the coronavirus pandemic, down from 72% in April. This would equate to a drop of as many as 499 projects, a decline of up to 45% on 2019 when 1,109 projects were recorded. The study found that 5% of companies had cancelled their investment plans, 35% had scaled back projects and 17% had put them on hold. The proportion of overseas companies intending to invest in the UK in the next year has fallen to 25%, marking a decline from a decade high of 31% in April. Earlier this year, EY found that, for the first time in two decades, the UK was not Europe’s top destination for foreign investment, with France preferred. However, EY’s Alison Kay says the overall outlook for the UK is stronger than that for Europe”, pointing to a solid base of digital technology, research and development and manufacturing.

The Times, Page: 47

M&C Saatchi’s three amigos to go

M&C Saatchi has announced that CEO David Kershaw, executive chairman Jeremy Sinclair and executive director Bill Muirhead – dubbed the “three amigos” within the industry – will all step down from the advertising group. The departures come in the wake of an accounting scandal that unfolded last year and prompted the resignation of Lord Saatchi and three directors. The firm was found to have overstated its accounts by £14m after PwC unearthed irregularities dating back to 2014. Mr Kershaw will be succeeded as chief executive by Moray MacLennan, while Gareth Davis will take over from Mr Sinclair as chair.

The Daily Telegraph, Business, Page: 1 Financial Times, Page: 12 The Times, Page: 45 Daily Mail, Page: 79

Lockdown hits the high street

The Yorkshire Post considers the climate for high street retailers, citing a PwC report showing that more than 11,000 shops closed during the first half of 2020 amid to the coronavirus lockdown, resulting in a record net decline of over 6,000 stores.

Yorkshire Post, Business, Page: 3

EMPLOYMENT NEWS – THURSDAY 19TH NOVEMBER 2020

Freelance shift points to hidden unemployment

A new Institute for Fiscal Studies (IFS) study suggests that some of the surge in self-employment may reflect “hidden unemployment” rather than a desire to be an entrepreneur or “people pursuing appealing business opportunities”. The report says the increase in the number of self-employed people from 2.3m in 2000 to nearly 4m last year has been “entirely driven” by sole traders and owner-managers of companies with no employees. It adds that these people “appear to be an increasingly marginalised group compared with employees”, saying their increasing prevalence may partly reflect a lack of opportunities in traditional employment. IFS analysis shows that in 2019/20, the self-employed earned 30% less than their employed counterparts, while a quarter of the newly solo self-employed were most recently unemployed. Andy Chamberlain, director of policy at the Association of Independent Professionals and the Self-Employed, has questioned the IFS’ findings, saying the “vast majority” of people have made “a positive choice to move into the sector”, pointing to research showing that just 5% of people said they began working for themselves because they had lost their previous job.

The Times, Page: 24

Report flags barriers to LGBTQ+ progression

Research commissioned by the Financial Reporting Council (FRC) has revealed that LGBTQ+ people have made a significant contribution within the business community, yet the barriers to their progression and extent of discrimination has often been stark. The report found that too often corporate culture has not been a welcoming environment for LGBTQ+ people to be themselves. In progressing to the highest ranks of corporate leadership, the leaders interviewed for the report often faced discrimination and had to make personal sacrifices. As a result, many chose not to disclose their LGBTQ+ identity until late into their careers. The FRC says firms should set clear policies and targets to nurture their next generation of LGBTQ+ leaders and diversify the workforce. The report adds: “To drive change, companies should regularly capture and transparently report the experiences of LGBTQ+ employees”.

Daily Mail The I Reuters

PROPERTY NEWS – THURSDAY 19TH NOVEMBER 2020

Record high UK house prices in September – ONS

Office for National Statistics (ONS) figures show that the average UK house price climbed by 4.7% in the year to the end of September, hitting a record high of £245,000. The ONS says pent-up demand and the stamp duty holiday are likely to be among factors that drove the increase in typical values. In England, average prices were up 4.9% to £262,000, while homes in Scotland saw the typical price climb 4.3% to £162,000. Wales recorded an increase of 3.8%, taking the average to £171,000, and Northern Ireland saw a 2.4% increase as the average hit £143,000. The report also reveals that London registered a record high, with the typical house priced at £496,000 in September.

The Independent, Page: 56 Daily Mirror, Page: 21 Financial Times, Page: 2 Daily Mail City AM BBC News Sky News

ECONOMY NEWS – THURSDAY 19TH NOVEMBER 2020

Inflation rises in October

UK inflation reached higher-than-expected levels in October after increases in the cost of clothing and food, with the Consumer Prices Index up to 0.7% from 0.5% a month earlier. Although this exceeded analysts’ forecast that inflation would remain flat at 0.5%, it still falls short of the Bank of England’s 2% target. Office for National Statistics (ONS) figures show that the rising price of clothing and second-hand cars fuelled the increase, with the cost of food also up slightly. ONS deputy national statistician Jonathan Athow commented: “The rate of inflation increased slightly as clothing prices grew, returning to their normal seasonal pattern after the disruption this year.” PwC economist Hannah Audino said the gradual increase in consumer prices could be temporarily cut short as England’s second national lockdown restricts activity and demand but says a pick-up in household spending in the run-up to Christmas “could put upwards pressure on prices”.

The Times, Page: 42 The Independent, Page: 52 The Daily Telegraph, Business, Page: 3 The Guardian, Page: 34 Daily Mail, Page: 77 Financial Times City AM BBC News

BoE’s Haldane: Digital currencies could lower risk

Bank of England chief economist Andy Haldane believes risk in the financial system could be lessened by the use of digital currencies. He told TheCityUK’s annual conference that a “widely-used” digital currency could help manage record-low interest rates, saying it could provide a simpler way for rates to be levied on assets, mitigating against concern that lower rates would not be passed on to borrowers. Mr Haldane also noted that a shortfall in lending to SMEs could be addressed through the use of an open data platform that gives lenders more information on smaller firms, with banks often charging more for lending to entities they have less data on.

City AM

OTHER NEWS – THURSDAY 19TH NOVEMBER 2020

Experts fear £12bn pledge may not deliver net-zero emissions

While experts have welcomed the Government’s 10-point plan for putting the UK on track for net-zero carbon emissions by 2050, the Guardian says many fear that the planned £12bn of public investment may not be enough to deliver the necessary shift in the economy. The paper cites a PwC estimate that suggests £400bn of investment in green infrastructure is required in the next decade to meet the net-zero target, with the firm’s head of energy and utilities, Paul Jennings, saying: “Government is signalling an intent and an ambition, which is really positive, but the £12bn investment … may not be enough.” The Times also notes the PwC estimate.

The Guardian, Page: 22 The Times, Page: 6

Contact Paul Southward

Paul Southward