Treasury plots tax windfall for higher earners

The Times’ Chris Smyth reports that the Treasury could be set to hand tax relief to those earning more than £110,000. The proposal comes with ministers looking for ways to prevent doctors being hit with huge bills, with those exceeding the figure facing more stringent taxes on their contributions. This has seen senior consultants turning down extra work for fear it will drive them over the threshold. It is understood that the Treasury has proposed raising the “cliff edge” threshold from £110,000 to £150,000 at which pension contributions are counted as earnings and lower tax-free allowances start to kick in. Paul Johnson, director of the Institute for Fiscal Studies, said it was hard to estimate exactly how much the change would cost, saying that the present rules were overly complex. He comments: “A more fundamental review both of the tax system and public sector pensions would be welcome.”

The Times, Page: 1

1m set to file tax returns close to deadline day

Data from tax return software provider GoSimpleTax suggests that around a million self-employed taxpayers are expected to file their annual tax returns in the final 72 hours before the January 31 deadline. The firm points to figures showing that one in 10 freelancers waited until deadline day to file their returns last year. The Telegraph, which notes guidance suggesting it is better to submit returns on time even if they contain errors than to hand them in late and incur penalties, details five changes for people submitting returns this month for the 2018/19 tax year. These include an increase in the personal allowance; an increase in the income tax threshold; and a reduction in the amount of dividend income that can be earned from investments held outside of an Isa.

The Daily Telegraph

Morse warns over advisers and loan schemes

Yorkshire Post deputy business editor Greg Wright looks at the role of professional advisers, saying that Sir Amyas Morse – who led the review into the loan charge – has spoken out over those marketing loan schemes. Mr Wright says that while much of the criticism over the loan charge has been centered on HMRC, Sir Amyas believes a new strategy is needed to examine intermediaries and their role in the loan charge saga. Sir Amyas said: “A key driver of ongoing scheme usage is a limited number of promoters and professional advisers who are selling schemes in spite of knowing that they will not deliver the tax benefits being promised.”

Yorkshire Post, Business, Page: 6

Carlaw pledges tax cuts

Jackson Carlaw, the front runner in the Scottish Conservative leadership contest, has launched his campaign by pledging to prioritise income tax cuts for middle earners. He said he wanted to cut bills for those earning between £26,000 and £45,000 but has refused to extend the priority tax cut pledge to those earning more than £45,000. He said: “Scots earning £26,000 are not Scotland’s affluent elite…Yet it is from that modest threshold that Scots begin an accelerated ladder of higher taxation.”

The Daily Telegraph The Scotsman


Pension tax rethink worth ‘hundreds of millions’

With the Treasury reportedly considering plans to raise the point at which restrictions to the pensions annual allowance kick in by £40,000 to £150,000, former pensions minister Sir Steve Webb has said such a move would hand “hundreds of millions in tax relief to tens of thousands of people”. Sir Steve says the tapered annual allowance is a “bad tax and bad law”, which “you just have to get rid of”. He added that the UK has a “really complicated” tax system and that the tapered annual allowance is “unpredictable, capricious and has cliff edges.” Analysts say the mooted change would mostly affect those paying the 45% top rate of income tax. HMRC figures show that the number of pension savers paying tax after breaching the annual allowance limit reached a record high in the 2017/18 tax year, with £812m of pension contributions made in excess of the allowance. Commenting on the proposed rethink, former shadow pensions minister Gregg McClymont, of The People’s Pension, urged ministers to hold a “long awaited and much needed” comprehensive review of the way pensions tax operates. If the Treasury agrees the overhaul, an announcement is expected by Chancellor Sajid Javid in the Budget in March.

The Daily Telegraph, Page: 4 Daily Mail, Page: 26 The I, Page: 8 Daily Express

Firms hit by tax relief confusion

Research of 500 businesses by digital bookkeeping app Receipt Bank shows that many are overwhelmed by the amount of paperwork they face, with 29% saying they have lost money due to issues with HMRC documents. A fifth said confusion over paperwork means they have missed out on tax relief, with directors saying their businesses have lost an average of £17,907 each due to confusion over the relief. Almost half said they don’t believe they have made all the claims their business is entitled to and a quarter did not know that claiming business expenses could reduce their corporation tax bills.

Daily Mail Daily Star

Opinion: CGT rethink would revitalise public markets

Jeremy Warner in the Telegraph suggests Chancellor Sajid Javid should consider reform of capital gains tax, proposing that investment in publicly listed companies up to a ceiling of £250m of market value at the time of purchase could be made CGT free. This, he feels, would revitalise public markets and “attract investment away from bigger, established companies and into smaller, up-and-coming ones”. Mr Warner notes that CGT is not a huge source of revenue for the Government, accounting for little more than 1% of the total take.

The Daily Telegraph, Page: 17

Javid to put his stamp on duty?

The Times’ Carol Lewis looks at what, if any, changes Chancellor Sajid Javid could deliver for stamp duty in his Budget, noting that a 3% surcharge on non-resident buyers has previously been pledged, while the Prime Minister has also said abolishing stamp duty below £500,000 was an aim. Sean Randall, a partner at Blick Rothenberg and chairman of the industry’s Stamp Taxes Practitioners Group, says this will be a “tax light” budget, with any bigger changes held back until the Government has been in power for a year. Richard Morley, a partner at BDO, offers guidance on “transitional rules” for cases where a change in duty occurs between a person exchanging and completing on a property deal, while Adrian Benosiglio of RSM UK notes confusion centered around the 3% surcharge on second homes

The Times, Bricks and Mortar, Page: 10



Rivals question Flybe rescue

Rival operators are challenging the Government-backed rescue of Flybe which enables the struggling airline to delay handing over a £106m air passenger duty bill. While Business Secretary Andrea Leadsom defended the move to safeguard UK regional connectivity, Willie Walsh, the outgoing boss of British Airways owner IAG, called the deal a “blatant misuse of public funds”. IAG has filed a complaint to the EU, suggesting the rescue deal may have breached state aid rules, while Ryanair has written to Chancellor Sajid Javid to voice concerns.

The Daily Telegraph, Business, Page: 1 Financial Times The Guardian Page: 37 Daily Mirror, Page: 9 Daily Mail, Page: 19 The Sun, Page: 45 City AM, Page: 1

Amazon investment plans on course despite digital tax

Amazon says a 2% digital services tax expected to be introduced in March’s Budget will not hit its UK investment plans, but could increase costs for small firms using its sales and delivery platform.

Financial Times, Page: 3

Dealership in sales talks

Administrators for motor dealership Leven Cars Group say they are engaged in “advanced talks” over a possible sale of parts of the business. Leven last week appointed administrators at Leonard Curtis.

The Scotsman, Page: 37

Jeanswest in administration

KPMG has been appointed as voluntary administrator of Australian operations of clothing retailer Jeanswest.

The I, Page: 41

Analyst warns ‘ostrich shops’ over excuses

Writing in City AM, Mark Halstead of financial risk analysts Red Flag Alert looks at what he calls “ostrich shops” – the retailer’s burying their heads in the sand and relying on “a checklist of overused excuses” as to why they are struggling, pointing to factors such as business rates and the challenging retail market. Successful stores, he argues, are those focused on providing shoppers with experiences they “can’t get sat in front of a laptop.”

City AM, Page: 16


Oliver starts again as administrators pore over failed firm

Guy Adams in the Daily Mail looks at Jamie Oliver’s decision to launch a new global food chain at a time when KPMG administrators are “poring over the wreckage” of his failed chain Jamie’s Italian, which collapsed last May. He notes that a KPMG report has named 288 people and firms that have potentially been left out of pocket and considers their possible reaction to the celebrity chef’s new venture.

Daily Mail, Page: 30



House prices climb

Office for National Statistics data shows UK house prices increased at their fastest pace in two years in the year to November – even before a widely expected election bounce. Average prices were up 2.2% in November last year, compared to a 1.3% jump in the year to October. The average UK house price climbed to an all-time high of £235,000. PwC economist Jamie Durham comments: “Assuming everything goes smoothly during the transition period, and the economic environment remains resilient, we would expect house price growth to strengthen this year.”

City AM The Daily Telegraph

New mortgages fell in November

The number of first time buyer mortgages dropped in November last year, according to the latest figures by UK Finance, following a surge in house purchase activity in 2018. There were 30,620 new first-time buyer mortgages completed in the month, down 10.5% compared to the same month the year prior, while homemover mortgages dropped 10.6% year-on-year. The research also found that there were 6,300 new buy-to-let home purchase mortgages in November, a decline of 4.5%. Remortgages in the buy-to-let sector fell 5.1% to 15,000.

City AM


£1bn cost of empty business rates relief

Analysis by the BBC shows that empty businesses mean councils in England lose out on around £1bn in revenue each year through tax relief for the vacant properties. The research shows that the North East and North West regions l ose the highest proportion of business rates income to empty units. The Treasury said it will announce a review of business rates “in due course.”

BBC News

Councils hit by business rates avoidance

Local Government Association (LGA) analysis suggests avoidance of business rates is costing local services an estimated £250m a year, with eight in ten local councils responsible for collecting business rates saying they do not have adequate powers to tackle the problem in their area. The LGA said councils need new legal powers to enter and inspect non-domestic properties to verify information and to request information from ratepayers and third parties. Richard Watts, chairman of the LGA’s Resources Board, said: “Too many businesses are exploiting loopholes and manipulating the system to avoid paying the tax they owe.”

Yorkshire Post, Page; 20



Businesses warned over settled status

Businesses are being urged to ensure European staff apply for settled status as soon as possible, or risk losing up to a fifth of their workforce. Analysis shows that a third of UK-based EU nationals have failed to secure their status. New research compiled by legal charity the AIRE Centre shows factory and construction jobs are particularly dependent on EU workers, accounting for 21% of the workforce. Retail and manufacturing could also struggle if EU workers leave the UK, with 50% of all EU nationals working in these industries. Meanwhile, the Guardian looks at the impact a reduction in EU workers would have on restaurants, citing a KPMG report for the British Hospitality Association which suggests that if free movement ends and no new immigration into the sector is allowed, the industry would need to recruit an additional 62,000 UK workers each year.

City AM The Guardian, G2, Page: 6

PM in apprenticeship levy pledge

Boris Johnson says the apprenticeship tax on companies will be overhauled to help poor white children “climb the ladder of opportunity”. With figures showing that white working-class boys are outperformed at every stage of education, MP Robert Halfon has called for reform of the levy to encourage firms to take on more apprentices from white working-class backgrounds. The Prime Minister said it was “absolutely right” that the apprenticeship levy could be better used to boost their prospects.

The Sun, Page: 2


Millions at risk of unemployment or unsuitable work

The Local Government Association (LGA) has warned that millions of people in England risk being unemployed, or in work they are overqualified for, by 2030 because of a skills “mismatch”. A study found that almost 13m people with intermediate skills could be chasing 9m jobs by the next decade. It also shows that 5m low-skilled people could also be competing for 2m low-skilled jobs. The LGA has recommended that the Government devolve all back-to-work skills, apprenticeships, careers advice and business support schemes to local areas to improve the situation.

The Independent Yorkshire Post



Small firms in poor regions lose out on loans

Analysis by business lender Iwoca suggests that small business lending has slipped in England’s most deprived areas. With lending to UK SMEs falling by 8% between 2014 and 2018, the country’s poorest regions are among the worst hit, with Blackpool – England’s most deprived area according to Government statistics – seeing a 31% fall. The analysis shows that SMEs in the wealthiest areas of England were able to borrow £41bn more than those in the poorest parts.

Daily Mail, Page: 81

Tech tax could hit small businesses, Amazon warns

Amazon’s UK boss has warned that the new 2% digital services tax could impact small UK businesses. Douglas Gurr, Amazon’s UK country manager, said the tax would not impact plans to create new jobs and open more distribution hubs but cautioned that the retail giant could offload the additional costs by raising charges for the small businesses that use its platform.

City AM, Page: 6



Inflation falls in December

Inflation fell to its lowest for more than three years in December. The rate dropped to 1.3% last month, down from 1.5% in November, with December’s inflation rate the lowest since November 2016. Analysts suggest the data increases the chances of a cut to interest rates, with inflation below the Bank of England’s (BoE) target of 2%. Melissa Davies, an economist at stock broker Redburn, said: “Very soft UK inflation data for December leaves the door wide open for a Bank of England rate cut on 30 January.” Michael Saunders, one of the rate setters on the BoE’s Monetary Policy Committee, has called for interest rates to be cut to combat the risk of the UK getting stuck in a “low inflation trap.” Mr Saunders, who voted for cuts in November and December, said: “It probably will be appropriate to maintain an expansionary monetary policy stance and possibly to cut rates further, in order to reduce risks of a sustained undershoot of the 2% inflation target”. Yael Selfin, chief economist at KPMG, said lower inflation put a cut “back on the menu”.

BBC News The Daily Telegraph Financial Times, Page: 25 Daily Mail The I, Page: 43 City AM Yorkshire Post, Page: 6


Credit for companies at lowest since 2008

The Bank of England’s (BoE) credit conditions survey shows that the amount of credit made available to corporates fell for the sixth successive quarter in Q4 2019. It fell to minus 9.2 in Q4, down from minus 3.5 in Q3, marking the fastest rate of decline since Q4 2008. The balance for expected demand for credit for capital investment over the next three months fell to minus 27.4 from minus 18.5, the weakest since Q1 2009. Howard Archer, chief economic advisor at EY Item Club , suggested that lenders had been concerned about domestic political uncertainty and a struggling economy. He said: “This was likely to weigh down on business activity and profitability, thereby making businesses less attractive and more risky to lend to.”

The Daily Telegraph, Business, Page: 1 City AM

Record low retail sector health

The health of the retail sector hit a record low last year, with the Retail Health Index published by KPMG and Ipsos reaching a record low of 74 in 2019 – the worst result since the tracker was established in 2006. The report says the “golden quarter” of Christmas trading did not deliver a strong enough rebound to negate a difficult year for the sector. The index score is expected to remain at 74 in the first quarter of 2020.

City AM, Page: 4



Survey highlights financial ignorance

A new survey on personal finance from Vanquis, the credit card and loan provider, has found that only one in three British people know the rate of VAT and fewer know how much you can invest in an Isa. The survey also found that 80% of people could not identify the correct definition of an annual percentage rate (APR) and nine in ten did not know the rate of NI contributions for an employed, basic-rate taxpayer. The question which stumped the most people was how much can usually be borrowed on a mortgage as a multiple of income – with only 5% correctly identifying the figure as 4.5 times the borrower’s earnings.

The Times, Page: 20

Food for thought for savers

People looking to save money could pass up take-away meals, with research from KPMG showing that more than a third of people cutting costs said they were having fewer – saving £451 a year per person.

The Sun, Mrs Crunch, Page: 1


KPMG calls for Budget to drive regional growth

A new report from KPMG suggests improving transport connectivity in the North is “imperative” and argues that the upcoming Budget offers a crucial opportunity to lift regional growth. It suggests that significant investment in regional transport and broadband connectivity will help link more economic areas outside London and the South East together. Yael Selfin, chief economist at KPMG UK and author of the report, said: “The Budget in March will offer the Government an opportunity to address the regional disparities in the UK, but if it is to make a long-lasting difference, it will need to be focused on the right areas.”

Yorkshire Post, Page; 18

Russian parliament backs tax chief for PM

Russia’s parliament has approved former tax chief Mikhail Mishustin as the country’s new Prime Minister. Mr Mishus tin has led the Federal Tax Service since 2010 and has been lauded for reforms that saw the removal of much of the system’s red tape.

The Daily Telegraph, Page: 15 The Times, Page: 30 The Guardian Financial Times, Page: 1

Contact Paul Southward.

Paul Southward