Business News – 4th May 2017

Labour could halve IHT threshold

Labour has indicated that it will lower the IHT threshold from £850,000 to £425,000. Shadow Chancellor John McDonnell pledged to scrap a series of tax giveaways introduced by the Conservatives, while a shadow Treasury spokesman told the Standard: “Labour does not support the Inheritance Tax giveaways announced by the Tories, as according to their own figures only 26,000 fewer estates would have no tax liability in 2020-21 at a cost of almost £1bn”. Cutting the threshold to £425,000 would mean properties worth £525,000 would attract IHT of £40,000. Attacking Labour’s economic policies, the Conservatives claimed that voters would face a £45bn tax and borrowing “bombshell” under Jeremy Corbyn. Meanwhile, Chancellor Philip Hammond has again refused to commit to a previous manifesto pledge that the Conservatives would not raise income tax, NI or VAT.

The Daily Telegraph, Page: 4 The Times, Page: 12 Financial Times, Page: 2 Financial Times, Page: 2 The Guardian, Page: 6-7 Daily Express, Page: 6-7 Independent i, Page: 8-9 Evening Standard, Page: 8-9 The Sun, Page: 16-17 Daily Mail, Page: 2

HMRC steps up scrutiny of image rights

In light of HMRC’s investigation into suspected tax fraud at football clubs, the Times looks at how disputes over image rights are increasingly concerned with income and tax. Last year Jon Thompson, the chief executive of HMRC, told the public accounts committee that the government should review the “rather convoluted” way in which elite sports stars pay tax on their image rights.

The Times, Page: 59

Government drops eBay and Airbnb tax breaks

Micro-entrepreneurs, like eBay sellers and Airbnb hosts, will not be entitled to a £1,000 annual tax allowance as promised by George Osborne in last year’s Budget. The Government has also reversed the reduction of the dividend allowance, from £5,000 to £2,000, which was supposed to be introduced in April 2018.

The Daily Telegraph

Spain to target Gibraltar’s “unjustifiable privileges”

A leaked Spanish government report has revealed that Madrid plans to use its veto over the future of Gibraltar in post-Brexit Europe to target its “unjustifiable privileges” on tax. Corporate tax on the Rock is 10%, the Telegraph notes, while in Spain firms fork out 25%.

The Daily Telegraph Financial Times The Times, Page: 8 The Sun, Page: 2

Pay tax in your 70s?

Economist Sir Andrew Dilnot has recommended that the younger generation should keep paying tax well into their 70s to fund elderly care.

The Sun, Page: 2

ACCA presents five-point manifesto

Ahead of the general election, the ACCA has released a five-point manifesto for the next government. It calls for: A sustainable industrial strategy for everyone; A practical approach to skills gaps; A return to the basics of the tax system; A holistic and prioritised approach to public sector funding; And avoiding overly prescriptive solutions to corporate governance concerns. “Britain is facing unprecedented challenges and opportunities over the coming months and years. This is a time for the government to take stock, review existing structures and strategies, and prepare a long-term plan to benefit the UK economy and business,’ said Helen Brand, chief executive of ACCA.

Sage to sell US payments business

Sage has confirmed it plans to sell its US payments division, but has insisted it will hold on to the UK business. The payroll company, whose software is used by more than half of British businesses, announced the move yesterday as it unveiled a 41% increase in half-year profits.

The Daily Telegraph, Business, Page: 4 Financial Times, Page: 12 The Times, Page: 48

Business pushes for rates reform

The CBI has called for a series of domestic changes to taxes and rules to promote innovation and enterprise in the UK, including a review of business rates as well as measures to reduce the overall tax burden on companies. Meanwhile, an alliance of retailers and SMEs has written to all three leading political parties calling for “fundamental reform” of business rates. The letter, orchestrated by the British Retail Consortium, proposes more frequent revaluations of properties on which the tax is based and a change in the inflation indexation from RPI to the lower CPI from next year.

The Times, Page: 40 The Daily Telegraph, Business, Page: 1, 3

More small firms missing AE deadline

An increasing number of small businesses are missing the deadline for auto-enrolment, according to research from NOW: Pensions. Of the companies that signed up to the provider in the first quarter of 2017, a record number (46%) signed up either very close or after their staging date deadline had passed. Another 25% actually missed the deadline, a significant increase on the 18% in the third quarter of 2016.


Mitie faces £50m writedown

Mitie Group has announced a potential £50m writedown following a review of its accounting policies undertaken by the company and KPMG. Mitie’s statement to the stock exchange said: “KPMG commented that our application of percentage of completion accounting and costs of contract mobilisation is less conservative, albeit still justifiable, than others in the market.” The review has also identified a number of material errors which may necessitate restating Mitie’s 2016 accounts.

The Times, Page: 42 The Daily Telegraph, Business, Page: 8 Evening Standard, Page: 39 Financial Times, Page: 18 The Sun, Page: 43

Lower life expectancy could cut pension deficit

Research by PwC indicates that around 6,000 final salary pension schemes could save £310bn if people die younger than first thought. Pension trustees have been working on estimates of life expectancy issued five years ago, but these were cut in updated figures earlier this year.

Daily Mirror, Page: 50 The Times, Page: 48 Financial Times, Page: 18

Foreign banks in UK to follow new rules on whistleblowers

The FCA has said British branches of foreign banks must inform UK-based staff that they can voice concerns to City watchdogs without having to tell their employers.

Financial Times, Page: 18

Cash Isas still favoured by 80% of savers

The FT’s Claer Barrett explores Britain’s “love affair” with saving into cash Isas. According to HMRC, almost £80bn was subscribed to Isa accounts in the 2015-16 tax year.

Financial Times

Take tax into account

Lucy Crow, tax manager at Henderson Loggie, advises homeowners planning to let their property via the sharing economy of the need to file a self-assessment tax return.

The Scotsman, Page: 28-29

Construction activity gathers pace

Activity in the construction sector has risen at its fastest pace so far this year following a sharp rise in civil engineering and housebuilding. The Markit/Cips construction purchasing managers’ index rose to 53.1, up from 52.2 in March, with any reading above 50 indicating growth in activity.

The Times, Page: 40 The Daily Telegraph, Business, Page: 3 The Sun, Page: 43

Companies urge Trump to ditch anti-inversion rules

US companies are urging the Trump administration to overturn an Obama-era crackdown on tax avoidance tied to inversion deals, arguing the regulations will impose excessive financial burdens on businesses operating in the US.

Financial Times, Page: 6