Business news 4 September 2024
Reeves pledges to cap corporation tax at 25%. Bank fraud prevention, WFH, tax, markets, insolvencies & more business news that we thought would interest our members.
James Salmon, Operations Director.
Reeves pledges to cap corporation tax at 25%
Chancellor Rachel Reeves has announced that corporation tax will be capped at 25% as part of a “tax roadmap for business” to be detailed in the upcoming autumn Budget. During Treasury questions, Reeves stated: “It is vital also that the tax system supports growth. I can confirm that at the Budget the Government will be outlining a tax roadmap for business to offer the certainty that encourages investment and gives business the confidence to grow, including our commitment to cap corporation tax at 25% for the duration of this Parliament.”
Banks will be able to block large payments for up to four days
Banks will be able to freeze payments for up to four days under new rules to prevent fraud, that’s up from the 24 hours banks currently have to investigate. The move comes ahead of the implementation of new rules to reimburse all victims of “Authorised Push Payment” APP fraud from October. However, lawyers warn that the change could cause chaos for home movers. Gareth Richards, of the Society of Licensed Conveyancers, said there are already sufficient steps in place for banks to identify unusual or suspicious activity. Separately, the Payment Systems Regulator is to consult on lowering the new maximum fraud payout to £85,000, down from £415,000, after lobbying from industry bodies such as UK Finance.
Markets
The US ISM Manufacturing index came in with a weak release of 47.2 sparking investor concern about slowing growth, falling oil prices and week industrial metals. The FTSE 100 closed down 0.78% at 8298.46 and the Euro Stoxx 50 closed down 1.22% at 4912.52.
Overnight in US, shortly after the open Warren Buffett’s Berkshire Hathaway became the first non-tech titan to join the $1 trillion valuation club of companies. but then the news turned sour as US shares plummeted after the US justice department sent subpoenas to Nvidia in its anti trust probe because it suspects that the company violated antitrust laws, made switching harder to other chip makers and penalized companies that didn’t use Nvidia’s AI chips exclusively. Nvidia fell 9.5%, wiping our $278 billion in valuation and marking the biggest ever single day decline of a US company! Across the markets Nvidia and the poor macro data took hold. The S&P 500 dropped 2.12% to 5528.93 and the NASDAQ sank 3.26% to 17136.30.
This morning on currencies, the pound is currently worth $1.311 and €1.1865. On Commodities, Oil (Brent) is at $72.75 & Gold is at $2483. On the stock markets, the FTSE 100 is currently down 0.7% at 8237 and the Eurostoxx 50 is down 1% at 4863 as market concerns in the US spilled over to Europe.
UK dealmaking falls to four-year low
New figures from the Office for National Statistics show dealmaking in the UK dropped to the lowest level in four years in June. The number of deals involving British businesses fell by 16.8% compared with Q1 while the total value of transactions fell from £13.8bn to £11.8bn. Caroline Rae, partner at law firm Herbert Smith Freehills, said: “The levels of UK mergers and acquisitions activity during the second quarter of 2024 are disappointing but not a surprise given the political uncertainty in the UK caused by the general election. However, we are cautiously optimistic that activity will pick up towards the end of the year as uncertainty over the economic outlook eases.”
HMRC to allow fractional shares in Isas ahead of rule change
The UK tax office has ended a ban on investors holding portions of shares in tax-free Individual Savings Accounts. The move comes after Labour confirmed it would proceed with legislation proposed by the Tories allowing fractional shares to be held in tax-free savings accounts. It is hoped the change will provide an overall boost in demand for shares, allowing the less wealthy to invest in expensive stocks. HMRC said in a statement: “The Government has committed to changing the Isa rules to allow certain fractional shares. Taking a pragmatic approach, we will not raise an assessment on managers or investors for fractional shares acquired before these changes are made.”
London slower to return to office than New York and Paris
Workers in London have returned to the office at a slower rate than in other global cities, research by the Centre for Cities has found. Workers in central London spend 2.7 days a week in the office on average, up from 2.2 days a week last year. Workers in Paris come in 3.5 days a week, while those in Singapore attend 3.2 days a week and workers in central New York spend 3.1 days in the office. Travel costs are one of the biggest factors dissuading workers from going in to the office in London. However, London is only city where younger workers come in to the office more often than their senior colleagues
“London’s return to the office has been sluggish when viewed internationally, and many signs point to its trajectory falling further behind its global competitor cities,” the authors, Rob Johnson and Oscar Selby, wrote. “Less frequent face-to-face interaction between employees in central London would put the city at a productivity disadvantage relative to other global cities.”
Paris is top of the office attendance ranking with an average of 3.5 days per week, followed by Singapore with 3.2 and New York with 3.1. Central London employees only go to the office for 2.7 days per week on average, with attendance higher among 18 to 24-year-olds than their older colleagues.
The costs and length of commuting to work help explain why more London employees prefer their home offices. Over 40% of London workers cited reduced travel costs as a perk of working from home, compared to an average of 34% across all cities. They were also more likely to highlight time saved as a result of not having to commute.
HP
Hewlett Packard said it intends to pursue the $4 billion damages claim in London against the estate of the recently deceased British tech tycoon Mike Lynch. Despite the death of Lynch and his 18-year-old daughter, Hannah, the US company said it planned to collect any damages that are awarded by a London court. HP won the British civil case over the collapse of Lynch’s Autonomy Corp and are waiting for the judge to set the level of damages. “It is HPE’s intention to follow the proceedings through to their conclusion,” the company said in a statement.
Non-dom tax overhaul could backfire
The Government’s proposed overhaul of the non-dom tax regime could lead to a loss of £1bn, according to research by Oxford Economics. The current system allows wealthy foreigners to avoid paying tax on overseas income for up to 15 years, but this will change in April 2025 to a residence-based regime with a four-year limit. The Office for Budget Responsibility initially estimated that scrapping the tax break could generate £3bn annually, but this is uncertain due to potential non-dom departures. Oxford Economics predicts a 32% drop in the non-dom population, with Chris Etherington from RSM warning that “the Chancellor could find her financial forecasts are built on sand if we see large numbers of non-doms leaving the UK.” In 2022-23, non-doms contributed £8.9bn in taxes.
Women in the North face stark inequalities
Women in the North of England are facing significant challenges, according to a new report by Health Equity North. The findings reveal that women in regions such as the North-West, North-East, and Yorkshire and the Humber have lower life expectancies and work longer hours for less pay. Kim McGuinness, Mayor of the North East, stated: “From leaving school to the boardroom, at home and at work, women and girls across the North bear the brunt of failings in our economy, society and public services.” The report highlights that girls born in these areas can expect to live in good health until only 59.7 to 62.4 years, which is up to four years less than the national average. Additionally, one in five women aged 55-59 provide unpaid care, contributing £10bn to the UK economy annually. The report calls for urgent measures to address these inequalities, including improved childcare and support for women to claim benefits.
Private school blames Labour for closure
Labour has been blamed for forcing the closure of St Joseph’s Preparatory School, in Stoke-on-Trent, a private school, which says its working class parents could not afford the Government’s VAT raid. Roisin Maguire, who was headteacher at the Catholic school for 12 years, said: “The parents at St Joseph’s Prep are not the parents at some of the very grand independent schools. They are people who do without things to provide the very best education for their child. The school was just about breaking even with a little bit of support from the trustees, but they do not have the finances to keep funding an additional 20% and then having to pay business rates as well.” Separately, research indicates that one in five private schools could close within three years due to Labour’s decision to impose VAT on fees. The accountancy firm Azets highlights that lesser-known private schools, particularly those outside London and the South East, will be most affected.
Hunt tests Labour pledge not to fiddle fiscal rules
The former Chancellor Jeremy Hunt has expressed concerns that the Government could still manipulate fiscal rules without adequate oversight from the independent Office for Budget Responsibility (OBR), despite claims a new bill will provide a “fiscal lock”. The Budget Responsibility Bill returns to the Commons on Wednesday and Hunt plans to propose an amendment requiring the OBR to analyse any changes to the Government’s fiscal targets. He stated: “If Labour fails to back this amendment it will confirm that the Chancellor is planning to fiddle the fiscal rules.” The Liberal Democrats have also introduced the “Kwarteng amendment,” aimed at empowering the OBR to report breaches of the Ministerial Code. A Government spokesperson defended the Bill, asserting it will prevent large-scale tax and spending announcements without OBR assessment.
SNP unveils £500m of cuts as it warns of ‘new era of austerity’ for Scotland
Shona Robison, Scotland’s finance secretary, has announced £500m of spending cuts to plug a £1bn black hole in Holyrood’s budget. Robison said Scotland would copy Westminster’s policy of means testing winter fuel payments for pensioners and lean on up to £460m in revenue raised by leasing seabed plots to offshore wind developers to pay for day-to-day spending. This money was supposed to be earmarked for reinvestment in Scotland’s green energy sector. Robison blamed “Westminster austerity” and Brexit for the shortfall and claimed Scotland would not be facing the cuts if it was independent. But the Scottish Tories said it was the SNP’s “financial incompetence” and huge overspending that had led to the crisis. The chair of the Scottish Fiscal Commission pointed out that if Scottish growth had matched the UK’s, Holyrood would have raised an extra £881m in income tax in 2022/23.
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Why you should become a member of CPA!
The Credit Protection Association (CPA) has been assisting thousands of UK businesses to get paid, since 1914. We have supported our members through all sorts of difficult trading environments. With high interest rates and a struggling economy and elevated insolvencies, our services can help your business navigate these difficult waters.
Unlike other credit management and debt collection companies, we offer a range of services to our members that are all included as part of a fixed annual subscription, tailored to your needs.
Under your annual subscription you will have access to our main services:
- Our Creditcare credit reports provide credit ratings and limits along with a host of detailed information on your potential customers to enable you to trade with confidence and set appropriate credit policies for new customers.
- Our monitoring service will alert you to any significant changes in the status of those customers.
- Our Overdue account recovery service can be used to chase up payment on any invoices to those customers that have not been paid on time. Unlike other debt collection companies, this service directs your customer to pay direct to you and allows you to maintain your goodwill with them, rather than inserting ourselves into your relationship with you customer and insisting they pay CPA instead. Our Overdue account recovery service resolves over 80% of accounts referred to us.
All of the above services and other complimentary services such address verification, are included in your subscription!
And for the small minority of debts not resolved through our Overdue account recovery service, you can refer the debt to our collections department to escalate the late payment collections process.
CPA eases cash from tardy debtors – Efficiently, Effectively, Economically and Ethically. And we provide credit information so you can monitor and assess your key customers and be warned of any potential risks. CPA has been improving business cash flow for over 100 years, by tackling late payers and campaigning against the late payment culture in the UK.
Unlike other credit management companies, we offer our members a fixed annual subscription regardless of how high the value of their debts maybe!
Rather than to borrowing more money to improve your cashflow, CPA suggests that business owners tackle the problem at its source. If late payments are a strain on your cashflow, then talk to CPA about how we can help you reduce those late payments.
Just call Peter Uwins, CPA’s National Sales Manager, on 020 8846 0000 (business hours) or email nsm@cpa.co.uk today.
When you see your money come in, you will be so glad you used CPA.
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections
Do you have a commercial late payer that is causing you grief? Use CPA’s no-win, no-fee, commercial debt recovery service!
If you have a particular business customer who is late paying and causing you sleepless nights, why not offer it to CPA’s collection department for purchase on recourse?
CPA’s collection department will then pursue the debt. We will be liable for any costs incurred and then when we have recovered the debt, we will pay you the net principle debt recovered less our percentage.
Once you have enjoyed that success then you can consider the more cost effective membership which includes our Overdue Account Recovery service and Status/Credit reports as well as a range of other complimentary services.
Just call 020 8846 0000 and ask for Godfrey Nelson or Cris Shirley (business hours) or email debtpurchase@cpa.co.uk today.
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.
Get compensated for previous late payments
Have you been paid late by business customers in the last six years?
Maybe you no longer work with them. Under legislation, you are entitled to compensation you for those late payments you have suffered.
You put up with the PAIN – now claim the GAIN!
Claim late payment compensation (LPC) from former business customers who paid you late in the last six years!
CPA (LPC) Recoveries is using our bespoke software and decades of experience to do just that for our clients
Check our compensation calculator to see how much your business could be owed!
Discover NOW the potential value of late payment compensation hidden in your sales ledger!
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.