Business news 31 July 2024
Chancellor says Budget is likely to bring higher taxes. Economists question infrastructure cuts. Markets, tax, HMRC, Eurozone, insolvencies & more business news that we thought would interest our members.
James Salmon, Operations Director.
Chancellor says Budget is likely to bring higher taxes
Chancellor Rachel Reeves has confirmed that the Government will raise taxes in October’s Budget, saying increases will be necessary due to a £22bn hole in the public finances. Asked if the Budget will bring higher taxes, The Chancellor told the News Agents podcast: “I think that we will have to increase taxes.” While Ms Reeves did not rule out changes to inheritance tax, capital gains tax, or pension reform, she reiterated Labour’s manifesto commitment that there will be no increases in income tax, National Insurance or VAT. Ms Reeves added: “We had in our manifesto a commitment to fiscal rules to balance day-to-day spending through tax receipts and by the end of the forecast period, to get debt down as a share of GDP. Those are sensible fiscal rules to keep a grip of the public finances.” Labour has already confirmed some tax rises, including a windfall tax on oil and gas companies and VAT on private schools. Meanwhile, Liberal Democrat Treasury spokesperson Sarah Olney has called on the Government to make large companies “pay their fair share” of tax.
Economists question infrastructure cuts
With Chancellor Rachel Reeves announcing £5.5bn worth of spending cuts as the Government looks to plug a £22bn hole in the public finances, economists have voiced concern over the decision to cut a number of infrastructure schemes. Rain Newton-Smith, chief executive at the Confederation of British Industry, said: “Given the catalytic impact on business investment and confidence, the Government cannot afford to take a short-term view on vital infrastructure projects.” George Dibb, associate director of economic policy at the Institute for Public Policy Research, commented: “If you want the highest growth in the G7 – which would improve the public finances – you can’t also have the lowest investment in the G7 as we do at present.” Anna Leach, chief economist at the Institute of Directors, said it was “clearly disappointing” to see some significant infrastructure projects cancelled, while Sam Richards, chief executive of Britain Remade, said capital spending cuts were not “risk free.” James Smith, research director at the Resolution Foundation, warns that if the Chancellor opts for a similar approach to capital spending in the Budget, “it wouldn’t be good for growth.”
Markets
Yesterday, the FTSE 100 closed down 0.22% at 8274.41 and the Euro Stoxx 50 closed up 0.53% at 4841.00 with the focus in London on corporate earnings and in particular Diageo which was a drag on the market after posting declining revenue and profit. Overnight in the US the S&P 500 fell 0.5% to 5436.44 and the NASDAQ fell 1.28% to 17147.42 as investors held their breaths ahead of the FED meeting.
This morning on currencies, the pound is currently worth $1.2827 and €1.1858. On Commodities, Oil (Brent) is at $80.29 & Gold is at $2419. With stock markets, the FTSE 100 is up 1.36% at 8386.77 and the Eurostoxx 50 is up 1.09% at 4893.98.
560k to receive simple tax assessments
In the coming weeks, 560,000 individuals will receive simple tax assessments for the 2023/24 tax year. These will be sent to those who owe income tax that cannot be automatically taken out of their own income, owe HMRC £3,000 or more, or have to pay tax on their state pension. An increase in interest rates means that more individuals with modest savings may now become liable to tax on their income. It will also be the first time many pensioners will receive a tax demand, because frozen personal allowance thresholds mean their state and private pension income have pulled them above the threshold. Of the half a million taxpayers expected to receive a tax demand letter, 140,000 of them will be pensioners.
HMRC service levels continue to decline
Analysis shows that HMRC last year hung up on 55,922 taxpayers after leaving them waiting on the phone for more than an hour. The tax authority will automatically hang up on callers once the wait time has exceeded 70 minutes. In 2023/24, the number of taxpayers cut off by HMRC for this reason surged by about 700% from just 6,875 in the previous year as customer service levels continued to deteriorate. Overall, HMRC answered just 66% of customers’ calls last year against a target of 85% and down from 71% in 2022/23. This was despite a 4% drop in the volume of calls, year-on-year. HMRC missed all five of its customer service targets last year, citing financial pressures and a rise in the number of taxpayers. The latest performance figures suggest the issues have continued into 2024/25. In March 2024, almost 900,000 taxpayers were forced to abandon their calls to the tax authority or were cut off after automated messages. Meanwhile, average call waiting times hit 28 minutes, compared with 23 minutes in 2023/24. Richard Wild of the Chartered Institute of Taxation said: “We continue to be concerned by the damaging impacts caused by poor HMRC customer service.”
Eurozone
The Eurozone Economy grew by more than expected in the second quarter of 2024. The zone’s gross domestic product rose by 0.3% in the three months to the end of June compared to the previous quarter, the data showed. Economists had expected a 0.2% increase on a quarterly basis. First-quarter GDP was confirmed at 0.3%, unchanged from the initial reading announced earlier this year.
Weir Group
Weir Group upgraded guidance for the year despite facing headwinds and economic challenges in the first half which adversely impacted profit. The Glasgow, Scotland-based engineering company provides solutions for the minerals and mining technology market. In the first half that ended June 30, statutory pretax profit fell 2.9% to £165 million from £170 million the previous year. Revenue declined 7.2% to £1.21 billion from £1.30 billion, while net debt reduced 12% to £738 million from £842 million.
Japan
The Bank of Japan has hiked rates this morning, another step to normalise an ultra-loose monetary policy that has been in place for most of two decades. Nudging rates up from 0.1% to 0.25%, this was only the second interest rate increase in 17 years. Officials also announced plans to curb their purchases of Japanese government bonds, aiming to roughly halve purchases by the start of 2026.
HSBC
HSBC declared a share buyback program of up to $3 billion, as pretax profit for the first half of the year beat expectations on the back of a high-interest rate environment. The bank posted pretax profit in the six months to June of $21.56 billion, down from $21.66 billion in the same period of last year.
Microsoft
Microsoft disappointed with its cloud service Azure reporting a slowdown in growth, reporting “only” 29% growth compared with 31% in the previous quarter with 8% coming from AI. Microsoft is expected to fall as a result.
Just Eat Takeaway
Just Eat Takeaway benefited from a strong surge in underlying earnings in its first half, facilitating a fresh share buyback programme and the backing of full-year guidance. The delivery group reported a 3% growth in gross transaction value (GTV) excluding North America for the first half of 2024, a trading update revealed.
2% billionaire tax could raise $250bn
Brazil has proposed a 2% global tax on billionaires, which would raise $250bn for climate funds or poverty alleviation. This comes as analysis shows that the wealth of billionaires has been growing rapidly, with Oxfam suggesting that a 12.8% annual tax would be needed to maintain their wealth at a constant level. Between 2020 and 2023, the world’s richest 1% captured 63% of economic growth. The collective fortune of billionaires rose by $2.7bn a day, while the five richest men on Earth doubled their wealth.
Secondary ticket market boosts economy by £733m
Analysis for Viagogo shows that the market for resold tickets for sports events and concerts has injected £733m into businesses that support live events, with 7,736 full-time equivalent jobs sustained by purchases made through secondary ticket platforms. The secondary market contributes £629 per seat in non-ticketing expenditure to the economy, boosting the accommodation and food service industries, as well as the transport and retail sectors. Cris Miller, Viagogo’s global managing director, said: “At almost three-quarters of a billion pounds, secondary ticketing in the UK makes a significant contribution to the UK economy.”
Carpetright creditors could lose £213m
Carpetright, the UK’s largest flooring chain, collapsed leaving creditors owed an estimated £213m. Administrators at PwC say unsecured creditors are expected to recover less than 1p in the pound. Carpetright filed for administration after HMRC issued a winding up petition for unpaid VAT and PAYE. PwC calculates that the taxman is owed £9m and it is expected that this debt will be paid almost in full. The company’s total liabilities are estimated to be around £338m.
Latest Insolvencies
Appointment of Administrator – LOCKWOOD DESIGNS LIMITED
Appointment of Administrator – TOMMI’S BURGER JOINT LTD.
Appointment of Liquidators – KEY TALENT FILM AND TV LIMITED
Appointment of Liquidators – AXIS WORKSHOPS LIMITED
Appointment of Liquidators – SHAD FORKLIFTS (NORTH EAST) LTD
Appointment of Liquidators – BURDENED FLOWER LTD.
Appointment of Liquidators – LAW 24 LTD
Appointment of Liquidators – TOMOLAMOLA CONSULTING LTD
Appointment of Liquidators – C S J CONSULTING LIMITED
Appointment of Liquidators – RSM MEDIA EXPO LTD
Appointment of Liquidators – ALICHEM (UK) LIMITED
Appointment of Liquidators – ROCKOVER LTD
Appointment of Liquidators – RBLAB LTD
Appointment of Liquidators – BEEPS & BOOP LTD
Appointment of Liquidators – ALIGADRO LTD
Appointment of Liquidators – LAMBDA SERVICES LIMITED
Appointment of Liquidators – SMERWICK HARBOUR LIMITED
Appointment of Liquidators – TH EQUITY BEER LIMITED
Appointment of Liquidators – CB EQUITY LLP
Appointment of Liquidators – SIGHTLINE PUBLICATIONS LIMITED
Appointment of Liquidators – EUPHORIUM PUBS LIMITED
Appointment of Liquidators – BPT (SOUTHERN NUMBER 2) LIMITED
Appointment of Liquidators – DALLAS MCG & CO LIMITED
Appointment of Liquidators – CHESSIDE HOMES LIMITED
Petitions to wind up (Companies) – HARTTRON LIMITED
Winding up Order (Companies) – FRONTLINE MEDICALS AND DIAGNOSTIC LTD
Appointment of Liquidators – DESIGN TO DRINK HOLDINGS LIMITED
Appointment of Liquidators – AMBROSE ESTATES LIMITED
Appointment of Liquidators – PACIFIC YOGA LIMITED
Appointment of Liquidators – FINCHSHEER LIMITED
Petitions to wind up (Companies) – ROCK DENIM LIMITED
Petitions to wind up (Companies) – TENDERIZE LABS LIMITED
Petitions to wind up (Companies) – ATHOL CONTRACTORS LTD
Petitions to wind up (Companies) – AGUIA GROUP LTD
Petitions to wind up (Companies) – QRG CONSULTING LTD
Appointment of Liquidators – GELLI HIR FARM LIMITED
Appointment of Liquidators – THE MAYFLOWER (CHELTENHAM) LIMITED
Petitions to wind up (Companies) – LSD SIGNS LIMITED
Petitions to wind up (Companies) – STEELS ARE STEEL LTD
Appointment of Administrator – HAMLYN WILLIAMS LIMITED
Appointment of Liquidators – MJC SYSTEMS LIMITED
Appointment of Liquidators – STRAWBERRY FIELD DEVELOPMENT LIMITED
Appointment of Liquidators – DAILEY BUSINESS AND TECHNOLOGY SERVICES LTD
Appointment of Liquidators – TIREE CONSTRUCTION SERVICES LIMITED
Appointment of Liquidators – ELIZABETH BUCHANAN CONSULTANCY LIMITED
Appointment of Liquidators – DRAGON FORMWORK LIMITED
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 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.
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Rather than to turning to more debt, CPA suggests that business owners tackle the problem at its source. If late payments are a strain on your cash flow, then talk to CPA about how we can help you reduce those late payments.
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. CPA’s overdue account recovery service is a polite, efficient service designed to encourage prompter payments while maintaining goodwill. We direct your customers to pay directly to you, not to us and want to support and reinstate your direct relationship with your customer, not take it over, destroying goodwill.
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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
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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!
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Check our compensation calculator to see how much your business could be owed!
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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.