So the summer is finally over and things can start getting back to “normal”. And it is welcome news that two leading City institutions – Credit Suisse and Morgan Stanley – have cancelled predictions of a Brexit recession and lifted growth predictions for 2016 and 2017, removing the expectation of a recession. The upward revisions followed good August results in the three main purchasing manager surveys — for the services, manufacturing and construction sectors.
The summer months used to be called the “silly season”, when the press attempted to keep their readers (and advertisers) happy by publishing frivolous stories to fill their pages. But in the era of 24-hour worldwide rolling news, this is no longer the case. What with the US elections, fighting in Syria, terrorist outrages, attempted coups, not to mention the Olympic Games, news has continued to roll right through the summer. For any of you who did manage to switch off during the break, welcome back to the Denton Briefing, my personal take on the recent stories that have grabbed my attention.
Inheritance tax payments hit record of £4.7 billion
The Treasury raised a record £4.7 billion from inheritance tax last year (2015/16), a 17% increase on the previous year and 91% higher than in 2010, writes James Slack in The Daily Mail. It now makes up 0.87% of all tax receipts in the UK – compared with 0.57% in 2010. Receipts have grown because the £325,000 threshold for payment of IHT has not been raised for six years. Had it been lifted in line with inflation it would be £391,000 – hitting far fewer families. By 2019, the next point when the threshold might be increased, this gap will have widened further. Former chancellor George Osborne announced more generous inheritance tax rules in last year’s budget, but the changes will not start to be introduced until next April.
London retains top global city crown
Accountant PwC ranks London the most business-friendly city in the world, well ahead of its closest rival Singapore. Right now, writes Matthew Lynn in The Daily Telegraph, London has the chance to rival Silicon Valley as one of the major start-up hubs of the world. London is fast becoming a tech powerhouse again. It is home to more unicorns – web start-ups with a market value of more than $1 billion – than any other city in Europe. According to GP Bullhound, it has 14 companies in the billion-plus category, more than three times as many as the rest of the UK combined, even though it only accounts for around a sixth of Britain’s population. But it needs the kind of pro-growth policies that will enable it to build on the success of the last decade. Such as? The green belt looks increasingly like a relic from a different era. It also needs its own visas to attract global talent. And it needs the fastest broadband in the world.
Government supports country-by-country tax transparency amendment
New UK legislation could force multinational corporations to make public the taxes they have paid in every country in which they operate, after MPs voted in favour of new tax proposals, write Mark Sands and Jake Cordell for City AM. This information is already provided to tax authorities but is not made publicly available. Introduced by Public Accounts Committee member and Labour MP Caroline Flint, the plans will work their way through parliament as an amendment to last year’s Finance Bill. Conservative Treasury minister Jane Ellison said the government “fully supports” the move adding it believed in “greater tax transparency and greater public disclosure of the tax affairs of large businesses”.
Irish government to appeal against EU Apple ruling
The Irish government agreed to back an appeal against the European Commission’s ruling that Apple should pay Ireland up to €13 billion – and perhaps as much as €19 billion if interest is included. Michael Noonan, Ireland’s finance minister, said Europe had overstepped the mark in attempting to dictate tax laws and enforce today’s rules on a tax deal with Apple that had been struck 25 years ago. Vincent Bolland in the Financial Times said the Irish government believes the ruling threatens the integrity of Ireland’s low corporate tax regime and could jeopardise inflows of foreign direct investment.
Premier League spending shoots over £1 billion
Maybe it is an unintended consequence of Brexit. Maybe it was just the weather. But the fact is that in this summer’s transfer window not only was more money spent by Premier League clubs but more money was spent in England than ever before. The question many fans will now be asking is where that money goes next, writes Paul MacInnes in The Guardian. According to research by the consultants Deloitte, Premier League clubs spent £1.165 billion in the transfer window. The reasons for the rise in spending are not difficult to ascertain, with the advent of the new £5 billion TV deal the primary culprit. For those concerned about the health of the domestic game the key question is what will happen to any newfound riches. According to Deloitte, the answer is simple: more players.
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