Business News – 19th May 2017

Conservative Manifesto

The Conservative party released its manifesto ahead of the UK general election this June, which contained several energy-related policies including a safeguard tariff for retail customers and a review of company share buybacks. After pledging to introduce a price cap on the standard variable tariffs used by 17 million UK households, the Conservative’s manifesto pledged to commission an “independent review” into the cost of energy to advise on how to get energy costs “as low as possible”, having previously said a cap of up to £100 per year per customer could be introduced. Theresa May has launched the Conservative manifesto, declaring that a strong economy and delivering Brexit are the party’s top priorities. As expected, the manifesto drops the 2015 pledge not to raise income tax or NI, but promises to raise the personal tax allowance to £12,500. Chas Roy-Chowdhury, head of taxation at the ACCA, predicts the Tories are now almost certain to resurrect their plan to increase NI contributions for the self-employed. The threshold for the 40p income tax rate will also be increased, to £50,000 by 2020. Corporation tax will fall to 17% by 2020, and a full review of business rates has been pledged. There is also a reduction of the so-called “triple lock” on pensions to a “double lock”, with the state pension to rise by the higher of average earnings or inflation – but to no longer go up by 2.5% if they are both lower than that. There will also be tougher punishments for those caught mismanaging pension schemes, with a potential criminal offence for company directors who “deliberately or recklessly put at risk” a pension scheme’s ability to meet its obligations. The manifesto says the Conservatives “want Britain to be a global nation that is competitive, outward-looking and open for business,” but adds that this must not include welcoming investors “whose success is driven by aggressive asset-stripping or tax avoidance”.

Adding up Labour’s tax plans

The University of Southampton’s Gavin Midgley considers whether Labour’s plans to raise £19.4bn by increasing corporation tax would succeed. He says the party’s calculations add up, but are dependent on companies not changing their behaviour in response to the policy. Separately, the Standard’s Anthony Hilton suggests Labour’s plan to increase income tax for anyone earning over £80,000 is flawed. He argues that someone earning £80,000 in London might be thought of as “rich”, but is in fact likely to be no better off than someone earning half that amount in most of the rest of the country. Jeremy Corbyn has said Labour would not hit people earning more than £80,000 with an immediate 5% income tax hike but it will be raised during the next five years if the party wins the general election.

Independent I, Page: 8   Evening Standard, Page: 48   The Press and Journal, Page: 18

Retail Sales

Warmer weather helped retail sales to rise by more than expected last month, according to official data. Sales volumes jumped 2.3% in April from the month before, the Office for National Statistics (ONS) said, and were 4% higher than a year earlier. April’s rebound contrasted with March, when sales saw the biggest fall in seven years. “Anecdotal evidence from retailers suggests that good weather contributed to growth,” the ONS said. The stronger-than-expected rise in sales pushed the value of the pound above $1.30 to its highest level since September last year.

Royal Mail boss condemns rivals’ tax arrangements

Royal Mail chief executive Moya Greene has called on the government to take action against firms which use the gig economy to avoid the costs of more traditional employment. Ms Greene hit out at “fictitious self-employment” by delivery companies that cut their NI bill by using self-employed couriers, who are often paid below the minimum wage once their costs are stripped out. “I want the government to look past this fiction,” she said, adding: “These employers are evading this tax.”

The Times   

Intelligent taxation can boost innovation

The Herald’s Business HQ supplement says governments can stimulate innovation by providing tax rebates or various forms of direct funding for innovation to businesses. It highlights the success of R&D tax credits and the Patent Box system.

The Herald, Business HQ, Page: 3-5

It is time for Britain to talk about raising taxes

The FT’s Martin Wolf says taxes in Britain will have to rise sooner rather than later in order to meet the rising cost of healthcare and pensions.

Financial Times, Page: 13

Money laundering ‘slipping through the net’

Money laundering crimes are “slipping through the net” because of budget cuts, Moore Stephens has warned. Over the last five years just 104 investigations have been opened, according to the City of London Police annual report, while its budget has been cut by 15% to £121.6m. John Baker, anti-fraud director at the accountant, said: “Businesses or individuals that have lost money from fraud often choose to pursue fraudsters privately through law firms, or accountancy firms such as ourselves, rather than relying on overstretched police forces”.

City AM

Oil prices rose, on the heels of a strong session. As investors shows some optimism about what will come out of next week’s meeting of OPEC

Gold prices snapped a six-session winning streak on to settle lower as a rebound in U.S. stocks dampened buying interest in safe-haven assets.

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