NEWS – TUESDAY 12TH MAY 2020
NEWS – TUESDAY 12TH MAY 2020
CORONAVIRUS (COVID-19) JOB RETENTION SCHEME
Chancellor to set out future of job retention scheme
The Chancellor Rishi Sunak will today reveal the future of the government’s job retention scheme. It is claimed that more than 6 million people are having 80% of their wages paid by the government while on temporary leave from work. The temporary measure is set to end in June and Rishi Sunak has previously warned that it is not “sustainable” at the current rate. Further updates will follow.
TAX NEWS – TUESDAY 12TH MAY 2020
Government consults on online market VAT changes
Alan Pearce, VAT partner at Blick Rothenberg, examines government plans to require online marketplaces to account for VAT on goods sold to consumers. He says the consultation is an attempt by HMRC to ensure VAT is collected on all consumer sales in the UK by moving the payment point away from the importation to the point of supply. The changes will only apply to sales valued at £135 or less but the current £15 limit that avoids any import VAT will be abolished from 1 January 2021. Pearce says this means consumers will face an increase in VAT payable on low value purchases due to the withdrawal of the £15 relief. “It could also mean an increase in the price of online goods as businesses seek to pass on the extra compliance costs to consumers.”
The I, Page: 39
Give home workers a break
Blick Rothenberg partner Nimesh Shah has suggested that people who work from home should get tax breaks to cover the extra expenses incurred by not going into the office. He suggested that HMRC should increase the tax-free allowance that employers can pay their staff from £26 per month to £50.
The I, Page: 41
EMPLOYMENT NEWS – TUESDAY 12TH MAY 2020
State may subsidise workers going part-time
Rishi Sunak is today expected to confirm that the furlough programme will be extended beyond its current July cut-off date until September. However, support will be reduced from 80% of wages to 60% and the £2,500 cap could be reduced. The Chancellor is under pressure to extend until the end of September and also subsidise workers moving to part-time. The Chartered Institute of Personnel and Development estimates more than 4m workers would have lost their jobs if not for government support. But Yael Selfin at KPMG says 1.2m could lose their jobs anyway as businesses close or contract as a result of the coronavirus-driven recession. Elsewhere, John Philpott, a labour market expert at the Jobs Economist consultancy, estimates that up to 20% of furloughed staff could be axed.
SMEs NEWS – TUESDAY 12TH MAY 2020
TheCityUK says British firms could be holding billions in unsustainable debt
Analysis from TheCityUK reveals that British firms could hold as much as £105bn in unsustainable debt by March next year. The financial services industry body has set up a recapitalisation group to agree on a collective response to the coronavirus pandemic from industry and government. The estimate was based on SMEs of the size that qualify for the coronavirus business interruption loan scheme. It excluded the smallest businesses as well as large listed companies. Chief executive Miles Celic remarked: “Our industry is determined to play its part in getting the country back on its feet. Working at a pace and with real determination, firms across the industry are collaborating to identify a financially viable pathway to recovery and a return to long-term growth for UK businesses.”
Small firms stressed as Barclays delays payments
Hundreds of small businesses have been waiting a week for cash approved through the government’s Bounce Back Loan Scheme by Barclays to come through, the Mail reports. A Barclays spokesman said: “We apologise to the small group of customers from last week whose payments were delayed and are working hard to have the money with them later today.”
Daily Mail, Page: 66
Companies can promote gift cards on Facebook and Instagram
Facebook and Instagram are selling gift cards that can be used to support small local businesses during the coronavirus crisis.
The Daily Telegraph, Business, Page: 7
CORPORATE NEWS – TUESDAY 12TH MAY 2020
P&O Ferries to axe 1,100 staff
P&O Ferries has announced plans to make 1,100 of its staff redundant as it battles to survive the coronavirus pandemic. A spokesperson for the firm said “right-sizing” the business was a necessary step to create a viable and sustainable P&O Ferries. Meanwhile, Rajeev Shaunak of MHA Macintyre Hudson, warned that UK package holiday operators could lose up to £5bn of business for this year.
The Times, Page: 34 Daily Mail, Page: 67 Daily Mirror, Page: 4 Yorkshire Post, Page: 4
Car components supplier enters administration
Arlington Automotive Group, which employs nearly 600 people at sites across the UK, has appointed Duff & Phelps to handle an insolvency process. The appointment makes it the first sizeable British car industry supplier to succumb to the COVID-19 crisis. Arlington supplies components to carmakers including Ford and Jaguar Land Rover.
PENSIONS NEWS – TUESDAY 12TH MAY 2020
Firms delaying payments into pension funds
A survey of 400 pension schemes by consultancy Isio has found that businesses are seeking to delay paying an estimated £200m per month into pension funds as they seek to stay afloat during the coronavirus pandemic. The research found that one in eight firms have asked trustees for permission to suspend deficit payments to their defined benefit schemes.
PROPERTY NEWS – TUESDAY 12TH MAY 2020
Landlords at risk from economic effects of ongoing pandemic
The Telegraph features a report on how buy-to-let landlords can best respond to the challenges posed by tax rises, changes to mortgage interest relief and falling yields, which have been exacerbated by the coronavirus crisis. With an estimated 80,000 landlords at risk of going bankrupt as a result of the pandemic, it advises property owners to examine how healthy their businesses are, utilise software such as Lendlord, negotiate agreements with tenants who might be facing their own financial problems, and plan for the near future, among other suggestions.
ECONOMY NEWS – TUESDAY 12TH MAY 2020
Output slumped by largest margin on record in April
Business output fell by 35.87 points in March to give a reading of 44.9 for April, according to BDO’s Output Index. Anything below 95 indicates contraction. At the height of the financial crisis the index measured 79.28.
Daily Mail, Page: 67
Another month of poor trading will see 250,000 businesses fold
A survey by the Centre for Economics and Business Research and Opinium suggests that 250,000 firms will fail this month if trading does not improve. Should the UK suffer a second wave of infections and a subsequent lockdown 1.1m businesses could fold.
Daily Mirror, Page: 4
INTERNATIONAL NEWS – TUESDAY 12TH MAY 2020
Proliferation of demands risks ‘sustainability reporting fatigue’
An article on the challenges facing investors tracking sustainability efforts by firms notes that the San Francisco-based Sustainability Accounting Standards Board (SASB) provides guidelines industry by industry.
OTHER NEWS – TUESDAY 12TH MAY 2020
Saudi Arabia triples VAT
Saudi Arabia is tripling VAT on basic goods and cutting spending on major projects amid the coronavirus pandemic and low oil prices. Citizens will also lose a bonus cost-of-living allowance.
Daily Express, Page: 48 Yorkshire Post, Page: 6 The Scotsman, Page: 10
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