Business news 25 October 2024
Some of business news today that we thought would interest our members.
James Salmon, Operations Director.
TAX
PM hints at tax rises for those with income from assets
Keir Starmer has indicated potential tax increases for individuals earning from shares and property, having said that they do not fit his definition of “working people.” Ministers have been urged to clarify a manifesto promise to “not increase taxes on working people.” Asked whether someone who works but also earns income from assets, such as shares and property, was a working person, Mr Starmer told Sky News: “Well, they wouldn’t come within my definition.” The Government faces pressure to uphold its manifesto promise of not raising taxes on working individuals, having made a pledge that income tax, National Insurance a VAT would not be increased. Chancellor Rachel Reeves is expected to increase capital gains tax on profits from the selling of shares. The Budget is also set to see National Insurance imposed on employers’ contributions to retirement funds.
Extended threshold freeze could raise £7bn
The proposed extension of the freeze on income tax thresholds could significantly impact British families, with estimates suggesting a potential cost of over £16,500 for high earners. Chancellor Rachel Reeves is reportedly considering prolonging the freeze from 2028 to 2030, which could generate an additional £7bn annually for the Treasury. This stealth tax increase would affect many workers, dragging them into higher tax brackets due to wage growth while personal allowance and higher rate thresholds remaining stagnant. For instance, a couple earning a high income could see their tax bill rise by £16,532, while average earners might face an additional £1,654.
Cassis: Private equity tax hikes are sensible
Rami Cassis, chief executive and founder of private equity boutique Parabellum, says Rachel Reeves’ plans to tighten taxes on private equity make sense and fears that the changes could drive dealmakers from the City are “overdone.” The Chancellor is reportedly planning to bring carried interest in line with capital gains tax. Mr Cassis said he “could see sense” in carried interest being treated “more onerously.” On fears of an exodus from the City, Mr Cassis says London “has a lot of attraction as a hub,” highlighting its infrastructure, legal system and investment opportunities, before going on to describe it as “the gateway to the US.”
FINANCIAL SERVICES
Banking complaints almost double
The Financial Ombudsman Service (FOS) received 101,031 complaints about banking and credit cards in the first half of the year, with this almost double the 56,690 recorded in the first six months of 2023. Across all products, the first six months of 2024 saw 133,019 new complains logged with the FOS. This marks a 40% rise on the year before. In the opening six months of this year, the FOS upheld 35% of complaints in the consumers’ favour, marking a slight increase on the 37% upheld during H1 2023. FOS chief executive Abby Thomas said: “Businesses should put consumers at the heart of their service but the high level of complaints we receive shows that’s not always the case.” A spokesperson for banking trade body UK Finance commented: “Credit card companies and lenders must comply with strict regulatory rules to assess whether lending is affordable, and they also provide a wide range of support to anyone concerned about their finances or repayments.”
ECONOMY
Chancellor to reform fiscal rules
Rachel Reeves has confirmed that the Government will change its self-imposed debt rules in order to free money for infrastructure spending. The Chancellor says officials will change the way debt is measured “so that we can grow our economy and bring jobs and growth to Britain.” She told a meeting at the International Monetary Fund: “We need to invest more to grow our economy and seize the huge opportunities there are in digital, in tech, in life sciences, in clean energy, but we’ll only be able to do that if we change the way that we measure debt.” Ms Reeves added that sustainable growth “does not come from short-termism … It comes from a responsible, long-term plan to invest in the future.” The Institute for Fiscal Studies estimates that preventing investment falling as a share of GDP would require an additional £24bn in investment spending by the end of the parliament. Economists at the EY Item Club say it “seems unlikely the Government would use all of the additional fiscal space.”
EY downgrades growth forecast
The UK economy has been downgraded, with the EY Item Club revising its growth forecasts for 2024 and 2025. The firm now predicts a growth of 0.9% for this year, down from 1.1%, and a reduction for 2025 to 1.5% from 2%. This adjustment is attributed to changing assumptions regarding consumer spending, particularly following a decrease in the household savings ratio, which was revised down to 10.0% from 11.1%. Matt Swannell, chief economic adviser to EY Item Club, said: “Lower household savings have reduced the scope of potential consumer spending.” Despite the downgrade, business investment is expected to grow by 1.3% this year and 3% next year. Hywel Ball, UK chair of EY, emphasised the importance of the upcoming Budget in addressing the UK’s fiscal constraints and boosting business confidence.
Economic activity falls amid Budget uncertainty
Economic activity declined in October, according to the S&P Global Flash PMI, with uncertainty around what the Budget may bring seeing businesses delay decisions. The PMI for October came in at 51.7 on an index where a reading above 50 represents positive sentiment. This was down from the 52.6 seen in September and the slowest rate of expansion since November 2023. Respondents said Budget uncertainty had delayed decision-making, with it also shown that business confidence fell for the third successive month. Chris Williamson, chief business economist at S&P Global Market Intelligence, said: “Business activity growth has slumped to its lowest for nearly a year in October as gloomy government rhetoric and uncertainty ahead of the Budget has dampened business confidence and spending.”
PwC: UK hit by ‘vibecession’
With PwC’s latest consumer sentiment survey showing a decline in September, the firm has warned that the UK is suffering from a “vibecession” – a disconnect between positive economic data and negative consumer sentiment – ahead of the Budget. The gauge of consumer sentiment slipped to -8 at the end of last month, with this the lowest point in 2024. Lisa Hooker, PwC’s leader of industry for consumer markets, said: “Despite falling inflation and interest rates and consumers being better off, sentiment has started to fall again.” She added that the decline may be fuelled in part by concern over potential tax hikes and benefit reductions, pointing to “trepidation” among consumers ahead of the Budget.
OTHER
Data Bill will ease red tape
The Government has introduced the Data Use and Access Bill, saying it will cut red tape for businesses and public service organisations. The Bill aims to make data sharing easier and, among other benefits, will expand open banking and smart data schemes that allow businesses and consumers to securely share their data with authorised third parties. Technology Secretary Peter Kyle said the Bill will deliver laws “that help us to use data securely and effectively,” adding that this “will help us boost the UK’s economy.” Neil Ross, associate director for policy at techUK, commented: “These legislative changes strike the right balance between maintaining the UK’s existing high data protection standards and driving forward essential reform.”
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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.