Business news 24 October 2024
Some of business news today that we thought would interest our members.
James Salmon, Operations Director.
TAX
Wealth tax could pull in £100bn, campaigners say
Rachel Reeves has been urged by a coalition of economists, climate advocates, and millionaires to implement a wealth tax in the Budget, potentially generating over £100bn. In an open letter to the Chancellor, the group said a wealth tax was necessary to “ensure that the wealthiest individuals in our society contribute their fair share during the Government’s promised decade of national renewal.” The letter, signed by 29 organisations including Unite, Greenpeace, Oxfam and Patriotic Millionaires UK, says: “There is more than enough money to pay to fix our public services, our economy, tackle the climate crisis and more.” Greenpeace has proposed a temporary 2.5% tax on individual wealth exceeding £10m, which could raise at least £130bn over five years. Despite the push, the Chancellor has previously indicated that a wealth tax will not be introduced.
Stealth raid worse than a tax hike
Analysis by wealth management firm Quilter suggests that a planned freeze to income tax thresholds would leave lower earners worse off than an outright tax rise. The study shows that raising income tax by 1p for every £1 earned and unfreezing the personal allowance to rise in line with inflation from 2028 would see those earning £20,000 or less £33 a year better off. Their overall tax bill would be £1,453 by the end of the decade. If the personal allowance remains the same and income tax remains at its current rate, the same worker faces a higher bill of £1,486. Shaun Moore, a tax and financial planning expert at Quilter, said: “The notion that Labour has not broken their manifesto pledge not to raise taxes on working people should they extend the freeze, would essentially be invalidated.”
Lloyds CFO says banks needs ‘competitive, stable’ tax regime
William Chalmers, Lloyds Banking Group’s CFO, says tax hikes on banks in the Budget could hinder lending and investment. He argues that the banking sector needs a “competitive, stable” tax regime to encourage investment in the UK. Calling for a “pro-growth” Budget, he said: “It is important to have a competitive, a stable tax regime to encourage the type of investment, and indeed the type of lending, that we would seek to do to promote the growth agenda.” He added: “Whatever the tax changes might be, we believe that they will be pursued in the context of a constructive, pro-growth agenda.” Analysis by PwC for trade group UK Finance shows that UK banks paid a record £44.8bn in taxes last year.
Reeves: Budget will be painful
Rachel Reeves has acknowledged that her upcoming Budget will be “painful,” with projections indicating that the UK may face its highest tax burden since the Second World War. The Chancellor is tasked with addressing a £40bn deficit, with potential tax increases estimated at £35bn. This could result in the highest tax revenue since 1993 and push the tax burden as a proportion of GDP above 37.2%, a level not seen since 1948. While main rates of income tax, VAT, and National Insurance are expected to remain unchanged, other areas such as capital gains and inheritance tax may see adjustments.
Labour’s tax pledge under scrutiny
Speculation is growing regarding Labour’s commitment to its manifesto pledge of not raising taxes for working individuals, particularly high earners. Angela Rayner, the Deputy Prime Minister, faced scrutiny during Prime Minister’s Questions, where she struggled to define “working people.” This has led to concerns about potential tax increases, especially after Health Secretary Wes Streeting indicated that the upcoming Budget would focus on lower and middle-income earners.
BUSINESS RATES
Amazon tax could hurt consumers and innovation
Chancellor Rachel Reeves is expected to announce an “Amazon tax” in her upcoming Budget, with a proposed reform of business rates set to align online giants with high street shops, which currently pay significantly higher rates. However, critics argue that this tax targets a successful sector, potentially stifling growth. Matthew Lynn in the Telegraph highlights a number of concerns if tech giants are targeted by reform of business rates, warning that the cost will simply be passed on to consumers. He also suggests that it “won’t just be Amazon that will be caught by the new tax,” saying that it will “apply just as harshly to the thousands of plucky, UK-based online start-ups” that are using the internet to sell products. Mr Lynn argues: “You can’t encourage growth by punishing success and innovation.”
Co-op CEO calls for business rates rethink
Co-op chief executive Shirine Khoury-Haq says the “fundamentally broken” business rates system is in need of reform at the Budget. Noting that her firm’s rates bill has increased by 20% in the last two years, Ms Khoury-Haq says the levy is a key factor in the decline of UK high streets. Calling for reform, she said: “There needs to be protection of bricks and mortar stores and there needs to be equity in terms of online businesses paying their share of tax as well.”
PENSIONS
Chancellor planning NI on employer pension contributions
Chancellor Rachel Reeves is reportedly planning to impose National Insurance on employers’ pension contributions in a move that could raise £15.4bn. While Labour’s manifesto ruled out a rise in income tax, National Insurance and VAT as part of pledge not to increase taxes on working people, ministers have refused to confirm whether this includes employer NI. Business groups have previously warned that removing the relief would increase the cost of employment, particularly for small businesses. The Institute for Fiscal Studies, however, says it would be “sensible” to remove the pension relief, describing it as “generous, opaque and poorly targeted.”
ECONOMY
Budget borrowing could slow rate cuts
Economists have warned that increased government spending is likely to force the Bank of England to slow the pace of interest rate cuts. Economists at Pantheon Macroeconomics said the “growth-depressing impact” of higher taxes expected to be introduced in the Budget would likely be “roughly cancelled out” by the boost to day-to-day spending. Rob Wood, chief UK economist at Pantheon Macroeconomics, said higher investment will boost growth, commenting: “Government investment has a much bigger impact on GDP growth than tax hikes do.” Paul Dales, chief UK economist at Capital Economics, suggests that the direct boost to GDP from a rise in public investment “would raise demand relative to supply,” adding: “That could mean inflation is a bit higher than otherwise and interest rates are cut more slowly.”
IMF: Public investment ‘badly needed’
The International Monetary Fund (IMF) has warned that public investment is “badly needed” to drive growth in the UK and prevent the national debt rising to risky levels. The IMF’s annual fiscal monitor report, which assesses tax and spending plans, projects that UK net debt will increase from 91.6% of GDP this year to 96.4% by 2029. Vitor Gaspar, director of fiscal affairs at the IMF, warned that the UK’s national debt level is “high, rising and risky.” Suggesting that Chancellor Rachel Reeves should not rule out borrowing to invest, Mr Gaspar said: “Public investment should be protected in the framework of a set of rules and budgetary procedures that foster sound macroeconomic performance.”
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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.