Business news 5 April 2024
PWC predict 30,000 business insolvencies next year. Small businesses to receive extra protection in energy contracts. UK services sector growth slows in March. And more business news that we thought would interest our members.
James Salmon, Operations Director.
PWC predict 30,000 business insolvencies next year
PWC are forecasting nearly 30,000 businesses will go insolvent next year, with the vast majority being small businesses. PwC report there will be a ‘significant’ rise in businesses collapsing, with companies in the hotels and catering, manufacturing, and transport and storage sectors looking likely to be hardest hit as businesses struggle under the weight of high energy prices, slow economic growth and the added weight of high interest rates.
30,000 UK corporate insolvencies in 2025 would be the highest level in 20 years, since 2004. Barret Kupelian, chief economist at PwC, said: ‘There is also likely to be quite a lot of zombie businesses, namely those that have been riding the wave of low interest rates for a longer period of time, that are likely to face difficulties as well.’
Small businesses to receive extra protection in energy contracts
Thousands of small businesses, schools, and charities in Britain will receive extra protection in their energy contracts under new rules announced by the Government and Ofgem. The changes will bring companies with under 50 employees under the umbrella of the Energy Ombudsman, extending the option and other protections to an additional 200,000 businesses. The new rules require brokers to provide full transparency over fees and ban energy suppliers from working with brokers not signed up to a redress scheme. “Too many businesses have experienced issues with some energy suppliers, from difficulty getting the right contracts, unexplained price hikes, and poor customer service,” said Ofgem director general for markets Tim Jarvis.
UK services sector growth slows in March
The UK services sector experienced a slowdown in March, with the weakest level of output growth since November last year. The purchasing managers’ index for the sector fell from 53.8 to 53.1, indicating a loss of momentum. S&P Global attributed the slowdown to a decline in new orders, squeezed household incomes, and rising wage and transport costs. Despite the dip, the overall picture for the services sector remains positive, with sustained improvements in new order intakes. The manufacturing sector, on the other hand, showed the best monthly performance in over a year, contributing to broader economic growth. Economists expect the UK economy to gradually pick up steam, supported by lower inflation, falling interest rates, and tax cuts.
Ministers plan to reintroduce tribunal fees
Ministers are planning to reintroduce fees for discrimination and harassment lawsuits, seven years after they were ruled unlawful. The proposed fees, which are lower than before, have been met with criticism from lawyers, charities, and campaign groups who argue that they will hinder access to justice. The Government estimates that the fees will generate up to £700,000 in 2024-25, reducing the annual cost to taxpayers. However, the Employment Lawyers Association warns that the fees will cost more to implement than they will raise and will have a disproportionate impact on poorer individuals. The Law Society and the Bar Council also express concerns about diminished access to justice. Critics argue that the fees will deter claims and allow bad employers to continue discriminatory practices.
Financial Ombudsman Service expects increase in complaints
More complaints about financial firms are expected this year than previously anticipated, according to the Financial Ombudsman Service. Gripes about perceived unaffordable lending, scams, and motor finance are expected to feature in the ombudsman service’s caseload. The estimate for new cases in the financial year 2024/25 has been increased to 210,000, due to factors such as unaffordable lending, credit card complaints, and fraud and scams. It is also a result of some motor finance commission cases which are not affected by the Financial Conduct Authority’s review of historical practices coming to the ombudsman. The ombudsman expects to receive 149,200 banking and credit complaints in 2024/25, with 13,900 anticipated to be about motor finance commission. The service has committed to resolving 17% more cases in the year ahead and plans to reduce the cost of its services to the industry.
Aegon calls for greater flexibility on state pension age
Aegon says the Government should explore giving Britons more choice over when they can start claiming their state pension, amid concerns over increases to the official retirement age. The pension age is expected to increase to 67 in 2028 and to 68 by 2048. Steven Cameron, pensions director at Aegon, said that while pushing back the state pension age would save governments money, it would be a “major concern” for those who feel unable to work unto their late 60s and early 70s. He added: “An ever-rising fixed state pension age could become increasingly divisive and out of sync with today’s flexible private pensions world.” Separately, research by Phoenix Group’s longevity think tank, Phoenix Insights, reveals half of under-50s believe there probably won’t be a state pension by the time they retire. Less than a fifth (18%) of UK adults said they could live on the state pension alone in retirement, while 22% of over-55s did not know the current state pension age.
Treasury urged to reform tax system to boost philanthropy
The UK’s Culture Secretary, Lucy Frazer, is urging the Treasury to reform the tax system to promote philanthropy, taking inspiration from the US. Currently, the UK lags behind the US in terms of charitable donations, with only 0.54% of GDP compared to 1.44% in the US. Frazer is proposing changes to the Gift Aid scheme, including the automatic addition of tax rebates for donations. Research shows that charitable donations from the top earners in the UK have decreased by 21% between 2011 and 2018. This push for tax reform comes at a crucial time for charities facing high inflation and increased demand for their services. The Treasury is engaging with the charity sector to improve Gift Aid through digital technologies.
Tens of thousands face crippling tax demands from HMRC
Tens of thousands of people across the country are facing crippling tax demands from HMRC for tax their employers did not pay. The Loan Charge policy, which came into force in 2017, targeted individuals who were paid their salaries through umbrella companies involved in tax avoidance schemes. Many of these individuals, including agency workers, were missold and had no idea they were being paid in loans. The Loan Charge legislation made individuals liable for tax that the employers should have paid, resulting in staggering sums and a devastating financial and psychological toll. Speaking to Sky News, one worker described overdosing after being overcome by the financial and mental burden. The consequences have been described as an unjust campaign that is targeting the wrong people and undermining taxpayer rights. MPs and tax lawyers are calling for the policy to be rescinded, arguing that it is retrospective and overrides statutory protections. HMRC continues to pursue individuals, while the promoters of the schemes often remain out of reach.
National insurance cut to kick in as new tax year starts
Workers across the UK will experience a reduction in their National Insurance (NI) payments, providing them with an extra £450 per year on average. However, the freeze in income tax thresholds until 2028 means that many individuals will face higher tax bills. The NI rate has fallen from 10% to 8%, benefiting 27m employees. Self-employed individuals will also see their NI contributions reduced from 9% to 6%. While some pensioners will not benefit from the NI cut, the state pension will increase by 8.5%. The freeze on income tax thresholds, known as fiscal drag, means that more people will be paying tax and at higher rates. The Institute for Fiscal Studies estimates that for every £1 given back to workers through the NI cuts, £1.30 will be taken away due to the threshold changes. The impact of the tax changes varies, with average earners benefiting more from the NI cut than the frozen tax thresholds. However, top earners have seen their taxes rise, and low-wage workers and pensioners are also affected.
Oil
Brent approached $91 a barrel as concerns mounted about exhanges escalating in the middle east between Iran and Israel.
Samsung
Samsung Electronics is riding on a wave of demand for its memory chips in the AI Boom. The South Korean conglomerate estimated that its operating profits surged by 931%in Q1 compared Q1 in 2023, to 6.6 trillion won (£3.8 billion).
Joe Lewis
The 87 year old British Billionaire, Joe Lewis was spared a spell in a US prison for insider trading and was instead fined $5 million.The billionaire, whose family trust owns Tottenham Hotspur, pleaded guilty to passing on tips to employees and friends.
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Why should you become a CPA member!
The Credit Protection Association (CPA) has been assisting thousands of UK businesses to get paid, since 1914. We have seen many financial crises, this one will be particularly deadly for suppliers for some time to come.
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.
Unlike other credit management companies, we offer our members a fixed annual subscription regardless of how high the debt value maybe!
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 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.