Business news 22 October 2024
Some of business news today that we thought would interest our members.
James Salmon, Operations Director.
Tax raid could leave £84bn black hole
Chancellor Rachel Reeves has been cautioned that an aggressive Budget tax raid could create an £84bn “black hole” in public finances, severely impacting economic growth. The Growth Commission’s analysis indicates that extreme tax rises could reduce GDP growth per capita by 8.8% by 2030, leaving individuals £3,788 poorer. The report warns that these tax increases could outweigh any benefits from Labour’s planning reforms, jeopardising the Government’s growth ambitions. The commission suggests focusing on productivity and cutting detrimental taxes to avoid economic stagnation. Douglas McWilliams from the Centre for Economics and Business Research commented: “Trying to run an economy on sharply higher taxes on business and capital is like trying to run a car on no oil.”
Business groups in tax raid warning
Business groups representing over 1200 UK founders and investors have warned that rumoured cuts to tax breaks for entrepreneurs “risk harming” the economy and could dissuade founders from setting up companies in Britain. In an open letter to Chancellor Rachel Reeves, the Quoted Companies Alliance, fintech trade body Innovate Finance, The Entrepreneurs Network and the UK Business Angels Association, have voiced concern over suggestions that the Budget could see tax reliefs including business asset disposal relief and an inheritance tax break on AIM shares scrapped. The letter also highlights concerns over the impact of any hike in capital gains tax or changes to tax which reward investors for backing early-stage companies. The business groups told the Chancellor: “The tax environment is often key to the decision for an entrepreneur when deciding where to establish their business.”
CGT hike would make UK less competitive
Research by the Tax Foundation suggests that an increase in capital gains tax would damage the competitiveness of the UK’s tax regime. While the analysis ranks the UK’s tax regime at 30 out of 38 OECD countries in terms of competitiveness, modelling by the Centre for Policy Studies (CPS) shows that many of the potential tax changes which are under consideration ahead of the Budget would damage the UK’s competitiveness further. CPS economic and fiscal policy researcher Daniel Herring said: “Any increase of CGT rates without substantial reform of the capital gains base will be highly damaging.” He added: “There’s a real danger that Britain could end up with one of the least competitive and most anti-growth tax systems in the OECD if the expected tax rises come to fruition.”
Minister offers no guarantee on tax plans
Government Minister Stephen Kinnock has refused to rule out an increase in taxes on those earning more than £100,000 in the Budget. While Labour’s election manifesto pledged not to increase taxes on “working people” – with a commitment on National Insurance, VAT and income tax – ministers have not set out a definition of “working people.”
Tax hike could hurt entrepreneurs
Rachel Reeves faces pressure over potential changes to capital gains tax relief, which could hinder entrepreneurial activity in the UK. The Federation of Small Businesses (FSB) warns that scrapping the relief could “increase tax bills for those selling their business,” jeopardising financial security for many entrepreneurs. FSB policy chairwoman Tina McKenzie said that removing the relief would deter everyday entrepreneurs, noting that many “invest their life savings into their ventures.”
PENSIONS
Pension fears spark saver panic
The boss of St James’s Place has warned that a tax raid on pensions could hurt UK investment. Amid speculation that Chancellor Rachel Reeves will reduce the tax-free lump sum that can be withdrawn by savers from their pension pots, Mark FitzPatrick warned that such a move could deter individuals from saving for retirement. He said: “This is causing uncertainty and resulting in changes in consumer behaviour, some of which may not be in their long-term interests.”
BUSINESS RATES
Hospitality bosses call for business rates relief
In an open letter to Chancellor Rachel Reeves ahead of the Budget, leaders from 170 businesses have called for permanent action on business rates relief. The letter warned that without action, high street investments “will be curtailed, employment opportunities will be squandered, and ultimately, we will see higher levels of business failures.” Signatories go on to urge ministers to “grasp this opportunity to deliver your manifesto commitment to fix business rates and protect businesses.” A 75% rate of business rate relief is set to expire on March 31. A poll of 500 mid-sized businesses by BDO shows that 18% hope to see the Government “commit to replacing” business rates, with the potential introduction of business income tax.
EMPLOYMENT
Workers’ rights will cost firms £5bn a year
Government analysis suggests that plans to upgrade workers’ rights will cost businesses up to £5bn a year to implement, with a disproportionate impact on smaller businesses. The report says the £5bn represents a “modest” amount and is less than 1.5% of the total amount spent by businesses on employing staff. The Department for Business and Trade study also suggests that “wellbeing” benefits of the measures would amount to £3bn. Measures put forward in the Employment Rights Bill would guarantee new rights for workers from the first day of their employment including: sick pay, protection from unfair dismissal, parental and bereavement leave. There would also be a ban on zero hour contracts.
Businesses urge ministers to cut red tape
Nearly a third of UK businesses are urging the Government to ease Brexit-related regulations to support international trade. A survey conducted by Santander revealed that 74% of businesses are optimistic about growth over the next three years, with 36% expressing “very confident” sentiment, a significant increase from 22% last year. However, 31% of respondents highlighted the need for reduced post-Brexit regulatory requirements, particularly in customs procedures and licensing. They also emphasised the importance of mutual recognition of professional standards and qualifications across Europe.
ECONOMY
Interest rates will fall to 2.75% – Goldman Sachs
Analysts at Goldman Sachs predict that interest rates will fall to 2.75% from the current rate of 5% by the end of 2025. While financial market forecasts suggest that the Bank of England will cut rates to 3.5%, inflation has fallen at a faster rate than had been predicted, with the latest reading of 1.7% per year coming in below the Bank’s 2% target.
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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.