NEWS – WEEKEND TO 1ST NOVEMBER 2020
NEWS – WEEKEND TO 1ST NOVEMBER 2020
TAX NEWS – WEEKEND TO 1ST NOVEMBER 2020
Shah: Tax rises could cover pandemic costs
Nimesh Shah, CEO at Blick Rothenberg, says that with the UK’s debt now greater in size than the economy, a 1% increase in income tax, national insurance and VAT would be the “easiest mechanism” for the Chancellor to raise money as the country looks to foot the coronavirus bill. Writing in the Express, he says adding 1% to each rate of income tax would raise approximately £5.7bn, while the same increase across national insurance and VAT would raise £6.4bn and £7.2bn, respectively. However, Mr Shah notes that such increases would break the triple lock pledge made by the Conservatives and be likely to draw “severe political challenge” from the opposition. On alternative options, Mr Shah notes that a new wealth tax has been strongly rumoured, as have increases to capital gains tax and changes to the inheritance tax regime. Mr Shah predicts that Rishi Sunak will announce increases to income tax, national insurance and capital gains tax in autumn 2021, with the increases taking effect from April 2022.
HMRC unsure over non-dom policy impact
The Telegraph’s Harry Brennan says the Government does not know if a policy designed to pull in more tax from non-doms has worked. In a move that was predicted to raise more than £385m by 2021, former Chancellor George Osborne in 2015 reduced the time it takes for a non-dom to start paying tax in Britain at standard rates from 17 years to 15. However, HMRC has said it would be too much work to cross-reference non-dom and standard tax returns to track the impact. Some experts suggest that some nom-doms may have opted to leave the UK, with figures showing that in 2015 there were 120,000 non-doms but the total had fallen to 78,300 by 2018-19.
The Daily Telegraph, Money, Page: 2
Trusts fall from favour for tax planning
HMRC statistics show 151,000 trusts submitted a tax return in 2018/19 compared to 154,500 the year before. Zena Hanks of Saffery Champness notes this marks the fifth consecutive year-on-year decline.
Ministers torn on taxes
David Maddox and David Williamson in the Sunday Express say ministers “are torn” over whether taxes should be raised or cut in the Chancellor’s next Budget. They cite a source close to the Prime Minister who says public finances “are shot” and there “may be little choice” but to raise taxes to start paying off the debt brought about by the coronavirus pandemic. However, another insider tells the paper that some ministers believe tax cuts are the way to go, saying: “This country is already overtaxed as it is and any more taxes could mean that we choke off the recovery.”
Sunday Express, Page: 6
Tax fear for the self-employed
The Sunday Times’ Kate Palmer says the self-employed are “facing a squeeze” because of the way they pay their tax, with many required to pay their income tax in advance twice a year, using the previous year’s earnings to work out the bill. However, with the coronavirus crisis potentially hitting income this year, “they could face bills that look larger than the income they are likely to receive.” Zena Hanks at Saffery Champness says: “People are thinking, ‘Crumbs, where has my income gone?’ yet have these looming tax bills”. “If you had a stellar 2019 and are now earning less, you need to do something about it, ” she adds.
Contact Paul Southward to learn how you may be able to reduce your tax liability and apply for time to pay with HMRC
PENSIONS NEWS – WEEKEND TO 1ST NOVEMBER 2020
Pension pot withdrawals up 6%
HMRC figures show that 347,000 people withdrew from their pension pots in July, August and September – a 6% rise on the same period last year. Despite the increase in withdrawals, the average amount taken out was £6,700 – a 7% drop on the previous year. Former pensions minister Baroness Ros Altmann issued a warning over people taking money from their pension in their 50s and 60s, saying: “We’ll have a whole generation of pensioners in poverty in future and that’s the real risk.” Jon Greer of Quilter said the rise suggested more people needed additional cash to see them through the crisis, while Steven Cameron of Aegon warned: “Pensions are designed to provide an income throughout retirement and reducing the amount of income withdrawn during a period of down turn could be important for the longevity of the pension pot.”
The Daily Telegraph, Page: 8 Daily Express, Page: 1
EMPLOYMENT NEWS – WEEKEND TO 1ST NOVEMBER 2020
Major firms cut 184k jobs amid pandemic
Large British companies have cut around 183,900 jobs this year, analysis by the Daily Mail suggests, with the coronavirus crisis delivering a wave of job losses. With the Government’s furlough scheme coming to an end today, employers have voiced concern that the Jobs Support Scheme being rolled out to replace it may not be enough to prevent further redundancies if new lockdowns and tighter restrictions are enforced. The Mail notes that while unemployment has reached a three-year high of 4.5%, the Bank of England predicts it could hit 7.5% by year end. The Federation of Small Businesses yesterday called on ministers to offer greater support to firms, with national chairman Mike Cherry saying its small business index shows that 30% of employers expect to make some staff redundant in the next three months. “That is the scale of concern and uncertainty that small firms are faced with for their businesses, with many letting staff go for the very first time,” he added.
Daily Mail, Page: 98
Furlough scheme extended at 80% rate
The Prime Minister has confirmed that the furlough scheme will be extended for a further month after England was placed under a four-week lockdown in an effort to bring down the rate of coronavirus infections. The Chancellor confirmed that the scheme will cover 80% of wages capped at £2,500 per month before tax during the new lockdown. This matches the original rate set out in March, not the version that had been in operation until yesterday which paid 60% of wages and saw businesses pay 20%. Before the nationwide lockdown, the Job Retention Scheme had been set to be replaced by the Job Support Scheme today, with this set to have been worth 49% of wages. Jonathan Geldart, director-general of the Institute of Directors, said: “Reinstating furlough is absolutely the right decision, and should bring relief to many businesses.”
Furlough extension what we know:-
Yesterday, the Government announced that the Job Support Scheme would not launch as intended today and they have instead extended their Furlough scheme until December.
Full guidance is yet to be published but the details we know are:
- The extended scheme will be more generous for employers than October and the subsequent cost for retaining employees will be reduced.
- Employees will receive 80% of their current salary for hours not worked, up to a maximum of £2,500 per month.
- Businesses will only have to cover National Insurance and employer pension contributions which, for an average claim, accounts for just 5% of total employment costs.
- They will have flexibility to bring furloughed employees back to work on a part time basis or furlough them full time.
PROPERTY NEWS – WEEKEND TO 1ST NOVEMBER 2020
House prices up 5.8% year-on-year
Figures from Nationwide show house prices have risen at their fastest pace in almost six years, jumping 5.8% year-on-year in October. This marks the highest rate of growth since January 2015. Month-on-month, prices were up 0.8%, with the average house price hitting a new record high of £227,826. Nationwide’s chief economist, Robert Gardner, says the outlook remains “highly uncertain”, saying much depends on how the coronavirus pandemic and measures to contain it play out. He also suggested the “efficacy of policy measures implemented to limit the damage to the wider economy” will have an impact. Mr Gardner says activity is “likely to slow” in the coming quarters, “perhaps sharply”, adding that the end of the stamp duty holiday in March 2021 will be a factor.
The Daily Telegraph, Page: 33 Daily Mail
Mortgage holidays extended
Mortgage payment holidays have been extended by three months in the wake of England being placed under a second national lockdown. The Financial Conduct Authority says borrowers who have not yet requested a payment deferral can do so for up to six months, while those who already have a payment deferral in place can extend it for up to six months. “It may also be in the interests of mortgage borrowers who expect to have long-term financial difficulties to agree other forms of tailored support with their lender,” the FCA added. A spokesman for the FCA said it will work with trade bodies and lenders on how to implement the extension “as quickly as possible”. The City watchdog is also considering whether to apply a similar extension to high-cost credit.
The Sunday Telegraph Reuters
SMEs NEWS – WEEKEND TO 1ST NOVEMBER 2020
CMA looks to protect start-ups from takeovers
The Competition and Markets Authority is planning to block large tech firms from snapping up start-ups that have the potential to grow into rivals. While the competition watchdog tends only to step in where there is a strong probability that a deal could harm competition, new plans would see it intervene in cases where the damage to competition is less certain. Under the plans, the watchdog could also demand that the likes of Google, Facebook and Amazon hand over their business plans when they launch takeover bids for smaller entities.
The Mail on Sunday
CORPORATE NEWS – WEEKEND TO 1ST NOVEMBER 2020
Executives resign over accounting error
The chief executive and finance director of domain name company Minds + Machines have resigned over an accounting error that saw money attached to three contracts incorrectly recognised as revenue in the company’s accounts when it should have been classified as deposits against future sales. Mazars, the company’s auditor, is understood to have failed to spot the issue. Correcting the error means 2019 revenues fell by $1.7m to $17.2m while profits fell from $4.7m to £2.8m. CEO Toby Hall and finance director Michael Salazar have stepped down so as to ease investor concerns over corporate governance.
Deltic up for sale
Deltic Group, the UK’s largest nightclub owner, has put itself up for sale having been driven to the brink of collapse by the COVID-19 pandemic. The business has begun a sale process while it considers other options, including a CVA. The group recently brought in BDO to explore potential options. More than 10 potential buyers, many of them private equity firms, are said to have expressed interest in Deltic.
The Daily Telegraph, Page: 33 Financial Times, Page: 15 The Guardian, Page: 42 The Sun, Page: 44 City AM
Business leaders voice lockdown fears
Businesses have warned of the impact the nationwide restrictions announced by the Prime Minister will have, saying England’s second coronavirus lockdown could prove a devastating blow to business communities. Adam Marshall, director general of British Chambers in Commerce, said market confidence has been “hit hard by the unclear, stop-start approach” taken by officials during the pandemic, adding: “Many firms are in a much weaker position now than at the start of the pandemic, making it far more challenging to survive extended closures.” Mr Marshall added that while the temporary extension of the furlough scheme “will bring short-term relief to many firms”, details of the full financial support package for businesses facing hardship “must immediately be clarified and communicated.” Confederation of British Industry director-general Dame Carolyn Fairbairn said that while firms share ministers’ ambition of defeating COVID-19, “for many businesses, a second national lockdown marks the start of a bleak midwinter.” She added that “with the right support firms will do everything possible to minimise the damage”, while noting that some sectors “may need more tailored support”.
The Mail on Sunday
EWM seeks rescue deal
Edinburgh Woollen Mill is looking to secure a rescue deal and prevent it from collapsing this week. The firm, which owns Peacocks, Austin Reed, Bonmarché and Jaeger, is in talks with potential investors, as well as groups that are keen on buying parts of its business. Sources say that if owner Philip Day fails to agree a rescue deal by Friday, administrators from FRP will be appointed. This could put more than 20,000 jobs at risk.
Sunday Express, Page: 43
Councils go to court for Caffè Nero rent
The Local Authorities’ Mutual Investment Trust, which invests on behalf of councils, has lodged a court claim against Caffè Nero, saying the coffee shop chain has not paid £135,389 in rent on a London site. Caffè Nero has clashed with landlords over rent payments during the pandemic. It has hired KPMG and is reportedly examining a CVA to cut rents and close branches.
Rolls-Royce starts boat engine sale
Rolls-Royce has hired Deloitte to run the sale of its Bergen Engines division, a unit which makes large engines used to generate electricity to power ships. Sources say a sale is expected early in 2021, with a price tag of up to £100m.
The Sunday Telegraph, Business, Page: 3
Retailers better placed for second lockdown
The Sunday Telegraph looks at the impact the new England-wide lockdown could have on the retail sector, citing Lisa Hooker, consumer markets leader at PwC, who says that while retailers are better prepared to deal with a second lockdown, consumer confidence could be hit.
Hotel hit to stretch to 2022
The Sunday Times considers the impact the pandemic has had on international travel and businesses linked to it, noting that a Deloitte poll of hotel businesses shows that 95% do not expect performance to return to pre-coronavirus levels until 2022.
The Sunday Times, Business, Page: 5
EFL clubs owe £77m in taxes
Figures show that clubs in the English Football League account for around £77m in unpaid taxes. Around £59m of the tax debt is owed by clubs in the Championship, with more than £13m due from those in League One and close to £5m owed by from those in League Two.
Sunday Express, Page: 10
Boohoo crying out for an auditor
Sam Chambers in the Sunday Times looks at the fortunes of online retailer Boohoo. He notes that PwC has resigned as auditor, saying that finding a replacement might prove challenging as, under tighter scrutiny of the profession, Deloitte, KPMG, BDO and Grant Thornton have all ruled themselves out of the running.
FINANCE NEWS – WEEKEND TO 1ST NOVEMBER 2020
Fee and interest concern over bailout loans
The Sunday Times’ Sabah Meddings reports that lenders are charging struggling firms large arrangement fees and high interest rates for bailout loans that are guaranteed by the Treasury. Looking at the costs associated with the Coronavirus Business Interruption Loan Scheme, she reveals that some providers are charging fees of up to 5% of the value of each loan, which can be £5m per business, and interest rates of up to 15%, which are paid by taxpayers in the first year. Greg Taylor, head of financial solutions at MHA MacIntyre Hudson, comments: “These are not business interruption loans, they’re business go-bust loans … This is supposed to be saving businesses rather than putting them under.”
ECONOMY NEWS – WEEKEND TO 1ST NOVEMBER 2020
Record climb in Eurozone growth
The European economy grew by 12.7% in the third quarter, figures from EU statistics agency Eurostat show, with this marking the largest increase since statistics were first recorded in 1995. The increase follows a 11.8% decline recorded across the 19 EU member countries that use the euro in Q2. France led the surge, with its economy growing 18.2%, while Spain (16.7%) and Italy (16.1%) also saw large gains.
The Daily Telegraph, Page: 34 Daily Mail
Bank of England expected to boost bond buying
Economists expect the Bank of England (BoE) to unveil a £100bn bond buying spree as the country goes into its second national lockdown, with the Bank forecast to boost the economy by expanding its quantitative easing programme. The potential increase in bond purchases will take the Bank’s balance sheet of government and corporate debt to a record £845bn. Talk of additional bond buying comes as fears of a double-dip recession intensify, with concern over the pressure a second lockdown will put on the economy. Capital Economics economist Ruth Gregory has warned that a UK-wide lockdown would “cause GDP to shrink again, perhaps significantly in the fourth quarter”. Analysts at HSBC suggest bond-buying operations are “running out of room”, increasing the likelihood that the BoE could turn to negative interest rates.
OTHER NEWS – WEEKEND TO 1ST NOVEMBER 2020
Business confidence falls
Analysis by Lloyds Bank shows that British business confidence has fallen for the first time in five months, with the increasing rate of coronavirus infections and subsequent restrictions designed to slow the spread of the virus having an impact. The bank’s business barometer, which polled 1,200 businesses, fell by seven points to -18, with the services sector driving the decline, although confidence among manufacturers and retailers improved slightly. Lloyds Bank economist Hann-Ju Ho noted that as well as concerns over the pandemic, businesses are also worried over a possible no-deal Brexit.
Contact Paul Southward