Business news 31st May 2024

Some of the business news that we thought would interest our members.

James Salmon, Operations Director.

Chancellor confirms stealth tax on workers will stay until 2028
Jeremy Hunt has confirmed that a freeze on income tax thresholds will continue until 2028, after which a Conservative government would raise them. The Chancellor told the BBC: “I can absolutely undertake that the threshold freeze that we introduced until 2028 will not continue after that.” By contrast, Sir Keir Starmer said “the burden on working people is too high” but Labour would not make any pledges on raising the thresholds. The Institute for Fiscal Studies warns that the freeze will bring 4.5m more people into higher income tax thresholds by 2028. Meanwhile, Labour has stated that the party will not increase value-added tax if it wins the upcoming election. This comes after Chancellor Jeremy Hunt claimed that Labour had not clearly ruled out a VAT increase.

Labour’s private school VAT hike driving up fees
Labour’s pledge to impose 20% VAT on independent schools will lead to an average increase in fees of 6.2% in the 2024/25 academic year, new analysis shows. Across this academic year and next, the increase in fees comes in at 15%, suggesting schools may already be passing on some of the expected costs of the VAT change. If schools pass on the full expected 20 per cent increase to parents the average boarding school fees would rise to £54,094, consuming 94% of the disposable income of the top 10% of earners. The Telegraph has published a private school tax calculator so parents can see how much their child’s schooling could cost.
 

Tackling tax avoidance won’t be easy
City AM looks at how much could realistically be raised by a crackdown on tax avoidance after both the Tories and Labour said they could find billions this way. Last year HMRC estimated that the tax gap was £36bn but avoidance itself makes up only £1bn of this – around £11bn is caused by a “failure to take reasonable care” while “error” makes up a further £5bn. Tim Sarson, head of tax at KPMG, said: “There is certainly more that can be done to collect underpaid tax.” But he adds: “The trouble is most of the tax gap is down to accidental or deliberate underpayment by small businesses and individuals, not grand avoidance schemes by huge multinationals.” Recovering this would be labour-intensive and would mean “more boots on the ground as well as greater investment in technology,” he explained.

Reform UK promises to bring in migrant tax
Reform UK has unveiled a proposal to charge British businesses a higher tax if they employ foreign workers. Party leader Richard Tice aims to incentivise British businesses to hire British staff by implementing an “employer immigration tax,” which would increase the national insurance rate for firms hiring non-UK workers. Tice claims that the UK economy has become overly reliant on cheap overseas labour. Under Reform’s plans, UK-based firms employing foreign workers would pay a national insurance rate of 20%, compared to the current rate of 13.8%. The tax hike would not apply to health and social care sectors or small businesses with five employees or less.
   

Next government advised to raise taxes
The National Institute for Economic and Social Research (NIESR) has called on the next government to raise £61bn a year in tax revenue to meet self-imposed fiscal targets. The think tank argues that the next government will not be able to reduce the deficit to below 3% of GDP until 2031 without additional spending cuts or tax rises. NIESR criticises the current fiscal rules as “arbitrary” and warns that they will force the next government into painful choices that could harm growth and investment. The think tank recommends income tax rises and the introduction of a land value tax to encourage development. Separately, a poll by Ipsos for the Financial Times showed 56% of voters expected the Labour party to raise taxes if they win the election, while 52% said they believe the Conservatives will hike taxes if they prevail.
   

Lib Dems would hike tax on tech giants to pay for mental health
The Liberal Democrats have proposed increasing taxes on social media giants and companies like Amazon and Google to fund mental health professionals for all state schools in England. The new workforce would be paid for by tripling the Digital Services Tax. Currently, nearly 340,000 children and young people are on waiting lists for mental health services and according to the NHS, one in five children and young people had a probable mental disorder last year.

ECB appoints advisers to sell Hundred shares
The England and Wales Cricket Board (ECB) will be advised by the US-based merchant bank Raine Group and Deloitte over the sale of Hundred teams to private investment. Stakes in each of the eight teams will become an investable asset, with interest from private firms in Europe, the United States, and India. An estimated £500m could be raised by the sales. In a statement the ECB said: “The ECB will continue working closely and collaboratively with its members through the process, including finalising how proceeds will be distributed among the First-Class Counties, MCC and the recreational game.”

UK mortgage holders hardest hit by rising prices, data shows
The Office for National Statistics said on Thursday that household costs rose 4.4% in the year to March, down from an annual rate of 5.3% in January and 12.3% a year earlier. The ONS Household Costs Index revealed that households with home loans had the highest annual inflation rate of 5.5% while outright owner occupiers had the lowest, at 3.3% in the period. The ONS explained: “Those groups who spent a higher proportion of their basket on mortgage interest payments saw higher annual household cost inflation rates than those who spent a greater proportion on household energy bills.”

PM pledges net zero slow roll
The Prime Minister has told voters he will not push the country to net zero prematurely, stating that preserving energy security was a priority as was protecting workers or homeowners from footing the bill. Speaking to factory workers in Milton Keynes, Rishi Sunak said: “What I don’t want to do is force you prematurely to rip out your boiler, upgrade your home, change your cars, because those things cost thousands and thousands and thousands of pounds, and we don’t need to do them right now.” He went on to promise to introduce measures “slowly over time in a measured way” instead of trying to “race to do it over night because that’s just going to cost you a fortune”. Meanwhile, Labour has pledged to create Great British Energy, a company funded by a windfall tax on oil and gas firms and which would invest in wind and solar projects across the UK.

Countries commit to global tax deal
Representatives from 127 countries agreed on Thursday to recommit to saving the first pillar of a global tax deal that will see multinationals taxed where their sales occur by the end of next month. Talks failed to produce an agreement after a three-day meeting in Paris, but the co-chairs said in a statement that countries were “nearing completion of the negotiations”, adding the aim was still to finalise an agreement by the end of June.

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 seen many financial crises, this last one was particularly deadly for suppliers fand we are still seeing elevated insolvencies as businesses struggle.

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.

Unlike other credit management companies, we offer our members a fixed annual subscription regardless of how high the debt value maybe!

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 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!