NEWS – WEDNESDAY 3RD JUNE 2020

NEWS ROUNDUP

TAX NEWS – WEDNESDAY 3RD JUNE 2020

Experts welcome NI holiday plan

With Chancellor Rishi Sunak said to be considering a national insurance holiday for employers as part of an economic recovery stimulus package, it has been suggested that the measure, which would cut costs business face, could save hundreds of thousands of jobs. The Taxpayers’ Alliance estimates cutting the tax could save or create between 595,000 and 892,000 jobs. John O’Connell, chief executive of the Alliance, said scrapping employers’ national insurance “would cut wage bills and kickstart hiring”, adding that this would deliver a “welcome boost to employment … and a meaningful long term simplification of the tax system”. Tony Wilson, director of the Institute for Employment Studies, said that while it would cost the Treasury “multiple billions per month” to waive the tax entirely, “there would be longer-run benefits because it would support job creation and that supports growth.” Federation of Small Businesses national chairman Mike Cherry also backed such a measure, noting that employment costs are consistently identified as the number one cause of rising outgoings among small firms.

The Daily Telegraph

US to probe Britain’s digital tax

The US has opened a trade investigation into several countries’ plans to make large technology companies such as Facebook and Amazon pay more in local markets, saying plans for digital taxes would “unfairly target” American firms. US trade representative Robert Lighthizer announced the investigation into digital taxes, with the probe covering jurisdictions including the UK, Italy, Spain and the EU as a whole. Mr Lighthizer said: “President Trump is concerned that many of our trading partners are adopting tax schemes designed to unfairly target our companies. We are prepared to take all appropriate action to defend our businesses and workers against any such discrimination.” Britain’s digital services tax, which came into force in April, consists of a 2% levy on revenues from advertising and online marketplaces generated in the UK, with it forecast to raise £500m a year.

The Daily Telegraph, Business, Page: 1 Financial Times

Report calls for stamp duty rethink

A Cass Business School and Centre for the Study of Financial Innovation report suggests people over 65 looking to make their final property move should be granted a cut in stamp duty in a bid to free up homes. Analysis suggests the UK has 15m surplus bedrooms in under-occupied homes, with it estimated that the total will hit 20m by 2040, with 13m of these in pensioners’ homes. Professor Les Mayhew of Cass Business School suggests stamp duty should be waived for last-time buyers, granting older buyers the same tax break as first-time buyers, who do not pay any stamp duty on property purchases of up to £300,000.

The Daily Telegraph, Business, Page: 3

Poll sees people back tax increase to cover social care

A Daily Express poll shows 41% of people would back a penny increase in income tax to boost funding for social care, with the proportion supporting such an increase climbing to two-thirds among respondents aged 55 and over. The paper notes that a percentage point rise in all rates of income tax would raise around £5.5bn.

Daily Express, Page: 6, 12

COVID-19 BUSINESS SUPPORT KEY DEVELOPMENTS UPDATE (02.06.2020)

Here is a summary of the key developments, including up to date statistics on the range of loan schemes available:

COVID-19-UPDATE

CORPORATE NEWS – WEDNESDAY 3RD JUNE 2020

Hotel firm eyes £140m rent reduction

Travelodge is set to launch a radical overhaul of its business, hiring Deloitte to oversee a CVA as it looks to secure rent cuts of more than £140m. Rejection of the CVA could see the firm call in administrators, the Telegraph notes. A source says 90% of owners will be given at least 50% of rent until the end of next year, bettering a previous proposal of 38%, while landlords will be entitled to 50% of any profits above £200m over the next three years. The hotel chain reportedly plans to raise £100m of debt from bondholders, with shareholders injecting up to £40m more by buying new stock.

The Daily Telegraph, Business, Page: 1 Financial Times, Page: 7 The Times, Page: 31

Mystery buyer saves 28 Oddbins stores

An unnamed buyer has snapped up 28 Oddbins branches, with Duff & Phelps saying the deal was signed “despite the current financial situation”. The group, which owns brands including Simply Drinks and Booze Buster, collapsed for the second time in February 2019, with a report in March revealing that 53 sites were still trading in administration.

The Daily Telegraph, Business, Page: 4

Private equity firm set to land airline

Private equity firms are the leading contenders to take over airline Virgin Australia, with Deloitte shortlisting Bain Capital and Cyrus Capital Partners as preferred bidders. Joint administrator Vaughan Strawbridge said both private equity entities are “well-funded, have deep aviation experience and they see real value in the business and its future.”

The Daily Telegraph, Business, Page: 5 The Sun, Page: 43

Tesco CFO steps down

Tesco CFO Alan Stewart plans to step down next April, after five years in the role. The Times notes that Mr Stewart helped to turn around Britain’s biggest retailer following an accounting scandal, with retail analyst Clive Black saying Mr Stewart “is a key component in effectively saving Tesco”.

The Times, Page: 38 Financial Times, Page: 10 Daily Mail, Page: 73

Virus put football clubs at risk

Bryan Jackson, a consultant at Johnston Carmichael, has warned that the coronavirus pandemic has left some Scottish football clubs at risk, saying: “It’s a very difficult question as to whether there will be any formal casualties.” He warned: “It wouldn’t surprise me if there are one or two casualties, with no income for quite a period where it’s expenditure only,” but, on a more positive note, added: “the football industry is now quite robust and might just see its way through it.”

The Press and Journal, Page: 46

FIRMS NEWS – WEDNESDAY 3RD JUNE 2020

EY quits role at ventilator maker paid £79m by Cabinet Office

EY resigned as auditor for Penlon after refusing to sign off the accounts of its holding company over a lack of sufficient evidence to give an opinion on financial statements.

Financial Times, Page: 2

EMPLOYMENT NEWS – WEDNESDAY 3RD JUNE 2020

8.7m workers furloughed

Government figures show that 8.7m workers have been placed on furlough as part of the UK job retention scheme, accounting for more than a quarter of the 33.1m person workforce. The HMRC data show 1.1m firms are using the job retention scheme, with the cost to taxpayers currently at £17.5bn. Analysis shows a net 300,000 workers were furloughed last week.

The Daily Telegraph, Business, Page: 1 The Independent, Page: 49 Evening Standard

PROPERTY NEWS – WEDNESDAY 3RD JUNE 2020

House prices fall at fastest rate since 2009

House prices fell 1.7% in May from the previous month to an average of £218,902, the largest monthly fall for 11 years, according to Nationwide. As well as the biggest monthly slump since February 2009, annual growth in house prices slowed to 1.8% from May 2019, down from 3.7% in April and the slowest rate since December. Recent Nationwide research indicated that one in eight people had put off moving because of the lockdown. The drop in Nationwide’s house price index in May “is just the start of a protracted decline over the remainder of this year,” warns Samuel Tombs, chief UK economist at Pantheon Macroeconomics.

The Guardian, Page: 16 The Daily Telegraph, Page: 2 Daily Mirror, Page: 2 The Scotsman, Page: 14 BBC News

Record decline in mortgage lending

Bank of England data show a record collapse in mortgage approvals in April, with 15,800 home loans given the green light. This marks an 80% dip on February, when the market had yet to be affected by the coronavirus outbreak. The figures represent the lowest monthly total since Bank of England records began in 1993.

The Daily Telegraph

FINANCE NEWS – WEDNESDAY 3RD JUNE 2020

Just half of CBILs approved

New figures show that companies have borrowed £31.3bn from banks through the Government’s three main coronavirus loan schemes, but only around half of loans on its flagship Coronavirus Business Loan Interruption Scheme (CBILs) programme have been approved. City groups have said EU state aid rules could be to blame for problems with the CBILs programme, with regulations excluding highly indebted or loss-making firms from receiving loans. More than two-thirds of the £31.3bn lent to businesses under coronavirus support schemes has come via the Bounce Back Loan Scheme for smaller firms, with £21.3bn handed to SMEs. The data show that over 963,000 businesses have asked their banks for support as part of the three bailout schemes, with almost 750,000 firms successful.

Daily Mail, Page: 73 Financial Times, Page: 2 Daily Express, Page: 49 City AM

ECONOMY NEWS – WEDNESDAY 3RD JUNE 2020

Household borrowing hits lowest on record

UK households sharply cut back on borrowing and repaid loans at a record rate in April, according to Bank of England (BoE) figures. A net £7.4bn of consumer credit was repaid. This is the largest net repayment since records began and double that of March, which was the previous record. £5bn of net consumer credit repayments were on credit cards. Households and businesses continued to increase their bank deposits in April, the BoE added. Holdings rose by £37.3bn in April, after an increase of £67.3bn in March. The Bank also said the cost of borrowing fell precipitously in April. The effective rate on overdrafts, including fees, was 10.9% in April, or 15 percentage points lower than in March.

The Times, Page: 31 The Scotsman, Page: 14 City AM Evening Standard

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Paul Southward