Weekend Roundup up to 24th
News – Weekend Roundup up to 24th November 2019
TAX NEWS – WEEKEND ROUNDUP
Business warns Labour’s reforms will wreck the economy
The Labour party’s tax plans have come under fire from the business community which says measures such as hiking corporation tax and dividend tax rates would stymie innovation and hurt the economy. The City UK says a new financial transactions tax would be “bad for business, bad for investors, bad for savers, and bad for the economy” while the Federation of Small Businesses said Jeremy Corbyn had broken a promise not to raise the small business corporation tax rate. Mike Cherry, national chairman of the FSB, said that “a small business owner making £40,000 could face thousands of pounds more in tax”. The FT cites IFS analysis which suggests Labour’s election manifesto would create the harshest tax regime on business income among the G7 but adds that if Labour’s inclusive ownership fund plan is included another 10% can be added to the corporate tax rate, making it effectively higher than any other country in the OECD. Experts also point out that Labour’s tax rises are likely to make Britain a less attractive place to invest, depressing share prices and hitting the value of savings and pensions. Labour touts its plans as a “radical reform programme” but the Times’ Philp Aldrick says “Labour is using disenchantment with corporatism as a cover to rip up capitalism. The party won’t change the economy, it will break it.”
Brexit Party reveals “Contract With The People”
The Brexit Party on Friday pledged a “political revolution” including the abolition of the House of Lords and an overhaul of the postal voting system to combat fraud and abuse. Party leader Nigel Farage said he preferred the term “contract” because manifestos were now dismissed as promises bound to be broken. Mr Farage said the party would push for a “clean break” from all EU institutions, reduce immigration, abolish inheritance tax, cut VAT on fuel bills and waive corporation tax on the first £10,000 of profits. The Brexit Party would also increase police numbers, bolster the NHS, abolish student loan interest, simplify planning consents for brownfield sites, invest £2.5bn in fishing and coastal communities and spearhead a global tree-planting initiative. Voters would also be given the right to hold a referendum on a subject of their choice every ten years if they secure five million signatures. Mr Farage added that his party would choose NATO over the European Defence Union, review the Universal Credit system and the position of women affected by recent rises in the state pension age.
Corbyn in Amazon protest vowing clamp down on a “tax and wage cheat culture”
The Labour leader is to stage a protest outside an Amazon depot today as he seeks to highlight his party’s manifesto pledge to reform tax rules for multinationals. Jeremy Corbyn will say: “We aren’t afraid to take on the corporate giants and the elite few, who are hoarding wealth and power.” He will accuse multinationals of using both their “power and our weak laws to rip off both the taxpayer and their workers.” Rain Newton-Smith, the chief economist at the Confederation of British Industry, warned Labour’s plans to increase business taxes will depress wages and investment and mean higher prices for consumers.
The Daily Telegraph, Page: 4 Yorkshire Post, Page: 5
Tories pledge “triple tax lock” and Brexit boost
Launching the Conservatives’ general election manifesto today, Boris Johnson will say a Tory government will not raise income tax, VAT or national insurance for five years – a “triple tax lock” – while protecting the value of state pensions and boosting spending on childcare. Mr Johnson will focus on the boost to the economy from getting Brexit done, promising to bring back the Withdrawal Agreement Bill before Christmas to achieve Brexit by the end of January. Other policies will include scrapping parking charges at NHS hospitals for patients, relatives and staff; spending billions on making homes energy efficient; a ban on the export of plastic waste to developing countries; a review of CGT relief for entrepreneurs. In an interview with the Mail on Sunday, Mr Johnson says his pledges are all fully costed and sound and that tax cuts will be paid for by “turbo-charging the economy”. The PM argues that Jeremy Corb yn’s planned £400bn spending splurge and tax rises targeted at the rich would take “a total sledgehammer to the economy”, adding: “Even the most Left-wing commentators are stupefied by the recklessness.”
CORPORATE NEWS – WEEKEND ROUNDUP
Eddie Stobart handed a stay of execution
Eddie Stobart’s lenders have given the lorry operator more than a year to repair its finances. KBC, Allied Irish Bank, Bank of Ireland and BNP Paribas, who between them are owed £200m, have agreed a rescue plan hatched by the offshore investment fund DBay Advisors, which floated Eddie Stobart in 2017. The company hit trouble three months ago when auditors PwC uncovered a series of accounting discrepancies and figures for the six months to May have still not been finalised and signed off.
Branson among those eyeing the National Lottery
Sir Richard Branson is among those vying to win the licence to run the National Lottery, with media boss Richard Desmond along with Dutch and Czech lottery operators also hoping to become the next operator. Canadian-owned Camelot has run the National Lottery since its launch 25 years ago. The Gambling Commission has appointed bankers from Rothschild, accountants from EY and Deloitte and lawyers Hogan Lovells to run the bidding process.
Power giants shift ownership offshore
The Sunday Times reveals that National Grid and SSE have shifted ownership of their British operations into offshore companies to protect against Labour’s threat of nationalisation. National Grid has shifted its gas and electricity businesses into new subsidiaries in Luxembourg and Hong Kong while SSE has put its UK business into a new Swiss holding company. Switzerland, Luxembourg and Hong Kong have “bilateral investment treaties” with the UK that ensure investors are paid properly in the event of any state asset grab.
PENSIONS NEWS – WEEKEND ROUNDUP
Ministers risk NHS pension tax breach in bid to avert pre-poll crisis
Matt Hancock has signed off an emergency package of pension reforms to encourage senior doctors to work extra shifts after they were penalised with hefty tax bills for doing so. Now, NHS boss Simon Stevens has said clinicians can pay any tax bill from their pension pot without paying up front and the NHS will make up the difference in annual pension payments. Professor Andrew Goddard, president of the Royal College of Physicians, said: “This is fantastic news and means that clinicians can finally deliver the best patient care without having to worry about the impact of punitive pension taxes.” However, Mr Hancock warned Mr Stevens that the scheme could constitute tax avoidance and that he should “seek to minimise this risk” when deciding on the detail. Steve Webb, director of policy with Royal London, and a former pensions minister, said: “It is astonishing that the NHS and the NHS Pension Scheme are having to bend the rules about tax pla nning to fix a problem that is all of the Treasury’s making.”
SMEs NEWS – WEEKEND ROUNDUP
Labour will herald ‘an exodus of entrepreneurs’
A slew of entrepreneurs have warned that Labour’s plans for the country pose a “huge threat” to wealth and job creation and would lead to businesses leaving the country. Investment veteran Peter Hargreaves, Carpetright founder Lord Harris and plumbing boss Charlie Mullins said Labour’s manifesto could lead to an exodus of successful businessmen. Mr Hargreaves said: “When people work very hard, have very successful businesses and are very entrepreneurial – government interference in their businesses and punitive taxes are just the things to cause them to leave.” Lord Harris of Peckham described Labour’s plan as “probably the worst manifesto I’ve ever seen” while Mr Mullins accused Jeremy Corbyn of not understanding business and called his policies “a vote-grabbing exercise rather than anything based in reality.” A Labour Party spokesperson said: “Labour welcomes the news t hat the vested interests who make a fortune from Tory tax breaks and ripping off the public don’t like our plans.” Separately, Deirdre Michie, chief executive of Oil and Gas UK, said Labour’s plans for a one-off windfall tax on oil and gas firms to help the UK “transition” to a green economy would “drive investors away and damage the competitiveness of the UK’s offshore oil and gas industry”.
Cynergy to encourage more women to run the family firm
A survey of small family firms conducted by Cynergy Bank found that 42% of owners were likely to pass on their company to a son but only 22% of those surveyed said that a daughter would inherit the family firm. Cynergy Bank is launching a £75m fund early next year to invest in family businesses run by women.
The Mail on Sunday, Page: 103
PROPERTY NEWS – WEEKEND ROUNDUP
Overseas buyers face higher stamp duty
The Conservatives plan to introduce a 3% stamp duty surcharge for non-UK residents, whether the overseas buyer is an individual or a company. Rishi Sunak, the Treasury chief secretary, said the move could raise up to £120m, adding that this would be used to tackle rough-sleeping. Meanwhile, the Liberal Democrats would crack down on foreign buying of second homes with a stamp-duty surcharge on overseas residents buying such properties.
The Daily Telegraph, Page: 6 Daily Express, Page; 5 The Independent, Page: 14 The Sun, Page: 2
HMRC pressures tenants to reveal details of overseas landlords
The Times reports on how HMRC has been writing to tenants asking them to provide details on their overseas landlords and threatening to charge penalties if the tenant has not deducted tax from their rental payments. But Ray Boulger from the mortgage broker John Charcol says: “It is outrageous for HMRC to ask tenants any questions beyond the name and address of their landlord, unless they want to offer the tenant a contract to do some sleuthing.” A letter sent to tenants in August says: “This property is legally owned by an overseas company. You may need to take off tax from your rent. We want to make sure you take off the right amount of tax and pay this to us.” Brian Slater from the Chartered Institute of Taxation says tenants have no legal obligation to respond to the letter.
Labour plans extra property tax on foreign buyers
Labour has pledged to put an extra tax on foreign companies and trusts buying property in the UK. It is part of the party’s wider tax plans and would charge offshore firms 20% for property purchases, on top of existing stamp duties and surcharges. Shadow chancellor John McDonnell said the levy, which will raise £3.3bn a year, was needed to “raise essential revenue for our public services”. The move comes after the Conservatives said companies and individuals who buy property in the UK, but are not tax resident here, will have to pay a 3% surcharge, raising an estimated £120m a year. The Lib Dems have also pledged to increase stamp duty for foreign buyers of residential property.
PERSONAL FINANCE NEWS – WEEKEND ROUNDUP
The cost of coupling
Research from Lloyds Bank shows that being in a relationship can cost you £3,600 a year, seemingly contradicting what has been dubbed the “singles tax”, a claim that those without a partner face a greater financial burden. Analysis of Office for National Statistics data found that single people spend £300 less on living costs per month – or £3,600 less a year – than those in a relationship.
Labour’s manifesto sparks flight from equities to cash
Investors have been shifting their money out of UK equity funds and into cash at a rapid rate as fears over a Corbyn-led Labour government grow. According to the investment analysts Morningstar £2bn was withdrawn from UK equity funds in October alone with funds such as Invesco High Income among the biggest losers. “People are nervous, so it’s not surprising to see the UK is one of the least-loved regions for investors,” said Emma Wall, head of investment analysis at Hargreaves Lansdown. “Our clients are least confident in the UK market, preferring the investment prospects of global emerging markets such as Japan, Asia and even the US – even though stock valuations look expensive.”
Labour would wash away incentive to invest
James Coney explains in the Sunday Times how Labour’s plan to peg dividends and capital gains to income tax rates would be one of the party’s most iniquitous policies as it would hit those who cannot afford to pay for accountants the hardest – workers, families and pensioners who are just trying to show personal responsibility and look after their retirement. He says it would also drain investment away from companies, harming their chances of growth. Labour’s financial transactions tax would not be paid by investment banks or pension funds, adds Coney, but end investors: “That’s you and me. Mr Corbyn, it’s not their money, it’s ours.”
WEALTH MANAGEMENT NEWS – WEEKEND ROUNDUP
Rich prepare to flee Labour’s ‘unreconstructed Marxists’
The Sunday Telegraph details how wealth managers and advisers are on alert with Britain’s wealthiest readied to flee the UK should Jeremy Corbyn win the keys to No 10. A raft of tax grabs and the threat of a further tax on wealth and capital controls add to concerns for the super-rich. Iain Tait, head of the private investment office at London & Capital, says there has been a “huge pick up in worried talk” among his clients as fears have moved from Brexit to Corbyn and McDonnell. “McDonnell is an unrepentant Marxist. He would have no issues whatsoever with the expropriation of private property,” Tait says. An editorial in the Sunday Telegraph makes clear that Jeremy Corbyn “is not trying to exploit capitalism to meet his social goals” but wants to destroy it altogether. “And he wants the process to be, in the words of John McDonnell, ‘irreversible’. This will destroy th e achievements and dreams of millions.” Finally, the Observer’s Will Hutton mourns the fact that although he considers Labour’s manifesto as “laudable” Jeremy Corbyn has handed ammunition to his enemies. “The 2019 manifesto, notwithstanding the virtue of its ambition, stretches even the kindest observer’s credulity to the limit,” he states.
The Sunday Telegraph, Business, Page: 5 The Sunday Telegraph, Page: 23 The Observer, Page: 11
ECONOMY NEWS – WEEKEND ROUNDUP
Sterling falls on weak survey data
The pound weakened on Friday after surveys showed British business suffering its deepest downturn since mid-2016. According to the “flash” early reading of the IHS Markit/CIPS purchasing managers index both the services and manufacturing sectors contracted in November. Chris Williamson, chief business economist at IHS Markit, said: “The weak survey data puts the economy on course for a 0.2% drop in GDP in the fourth quarter, and pushes the PMI further into territory that would normally be associated with the Bank of England adding more stimulus to the economy.” Howard Archer, chief economic adviser to the EY Item Club, commented: “There is very little – if anything – in the survey on which to pin hopes for a pick-up in activity in the near term.”
Daily Express, Page: 37 The Guardian, Page: 41 The I, Page: 74
Treasury hikes borrowing amid council bankruptcy fears
A surge in councils borrowing to buy commercial property in the hope of generating rental income has spurred the Treasury to increase the cost of borrowing from the Public Works Loan Board by 1%. Sources tell the Telegraph there are concerns the borrowing could become unsustainable and councils could be left stranded with declining assets. But Pantheon Macro economist Samuel Tombs said the Treasury’s intervention means borrowing costs have “skyrocketed” and has jeopardised “many capital projects that local authorities had planned”.
OTHER NEWS – WEEKEND ROUNDUP
Tax bills prompt jungle exploits?
The Mirror’s Mark Jefferies suggests former footballer Ian Wright may have joined this year’s I’m A Celebrity… Get Me Out of Here to help pay off a tax bill, noting that he once owed £2m and admitted he was “at the mercy” of HMRC. This comes after fellow contestant actor Cliff Parisi said he had initially turned down the show until his accountant showed him a huge tax bill.
Daily Mirror, Page: 14 Daily Star, Page: 4
Conservatives have 19-point lead over Labour
The latest Opinium poll for the Observer puts the Conservatives 19 points ahead of Labour, with a 47% share of the vote compared with Labour on 28% and the Liberal Democrats on 12%. The Brexit Party’s share of the vote has fallen to 3%. The poll comes as the Tories launch their election manifesto today, which will attempt to deliver a stripped-down manifesto that focuses on extra funding and the party’s main pledge to “get Brexit done”. Elsewhere, analysis of five polls by Electoral Calculus for the Sunday Telegraph puts the Conservatives on course to win about 357 seats, giving Boris Johnson a 64-seat majority, while Labour would lose 55 seats. The poll lead is dependent on the Remain vote not shifting behind Labour, however, according to analyst Sir John Curtice.
The Sunday Telegraph Sunday Express, Page: 4 The Observer
Contact Paul Southward.