What does the Reform UK manifesto promise for business?.

18/06/2024


Nigel Farage’s Reform UK party published its General Election manifesto yesterday. The key policies proposed on the economy, jobs, tax and business are:

·       No tax on income up to £20,000

·       A basic rate of tax at 20%. No higher rate until earnings hit £70,000

·       Cut fuel duty by 20p per litre for both residential and business users. 

·       Scrap VAT on energy bills, and scrap all environmental levies on energy bills

·       Cut Stamp Duty to 0% below £750k; 2% from £750k - £1.5m; 4% over £1.5m.

·       Abolish the so-called ‘Tourist Tax’ so visitors from overseas can reclaim VAT on purchases

·       Abolish Inheritance Tax for all estates under £2m and thereafter charge at 20%, with an option to donate that to charity instead of HMRC

·       Corporation Tax: lift the minimum profit threshold to £100k. Reduce the main CT rate from 25% to 20%, then to 15% from Year 3

·       Abolish IR35 rules “to support sole traders”

·       Lift the VAT Threshold to £150,000

·       Abolish Business Rates for high street based SMEs, but introduce a 4% Online Delivery Tax for large, multinational enterprises “to create a fairer playing field”

·       Cut entrepreneurs’ tax to 5%.

·       Reform the planning system and fast-track new housing on brownfield sites

·       Reform and simplify the entire tax system: “At over 21,000 pages, the UK’s tax code is a burden”

·       Stop the Bank of England paying interest to commercial banks on QE reserves to save around £35bn annually  

·       Fast-track licences of North Sea gas and oil and grant shale gas licences on test sites for 2 years; then enable major production when safety is proven, with local compensation schemes

·       Ensure taxpayer funded organisations source 75% of their food from the UK.

Reform’s manifesto, titled Our Contract with You, says: “The economy is being wrecked by record high taxes, record high national debt, wasteful government spending and nanny state regulations”. “The Tories have broken Britain. Labour will bankrupt Britain. A vote for either is a vote for more incompetence, dishonesty and defeat,” it continues.

Investment in the UK is “significantly” behind the rest of the G7 and ranks just 28th out of the 31 Organisation of Economic Co-ordination and Development (OECD) countries, The Institute for Public Policy Research (IPPR) says. [1] Currently, the UK has investment equalling 11.3% of national income, far behind the next worst G7 performer, the US, with 21.2%. The think-tank’s report, Rock Bottom, also noted that the UK has had the lowest level of investment in the G7 for 24 of the past 30 years. The IPPR called on the Government to invest in infrastructure, such as new schools, new roads, and the NHS, and to commit to an industrial strategy similar to that adopted by President Joe Biden in the US. But, at the moment, the report warns, both Labour and the Conservatives plan to cut public investment, putting grown at even further risk. The IPPR also called for an end to “policy chop-and-change, as it is “confusing” for business and “undermines UK economic credibility and stability;” and for the tax and subsidy systems to align with industrial strategy. "If the economy is an engine, then investment is its fuel," said Dr George Dibb, associate director for economic policy at the IPPR. He added: The UK’s dire productivity performance is the single biggest driver of our dire living standards. Without resources flowing into new investment, it’s hard to see how UK economic performance can improve.

Office staff who work from home, particularly in London, are dragging down Britain’s productivity growth, the Office for National Statistics suggests. Productivity in the capital tumbled by 2.7% between 2019 and 2022 when considering output per hour worked, the ONS said. Wales was the only other region to fall. The strongest growth came in the North West of England, where productivity jumped by 7.9% over the same period.

Shadow Chancellor Rachel Reeves has said a new Labour government will seek to renegotiate the 2021 post-Brexit Trade and Co-operation Agreement (TCA) with the EU. She told the Financial Times she would look to get better terms in crucial areas like financial services and chemicals trade, which were largely left out of the deal. “We would look to improve our trading relationship with Europe, and do trade deals around the world,” she said, adding that Labour would not take an “adversarial” approach to EU relations, and suggesting she would seek closer alignment on many regulatory issues. “The majority of people in the City have not regarded Brexit as being a great opportunity for their businesses,” she said.

Private Equity: Meanwhile, Reeves has backtracked on plans announced last week to close a tax break for private equity fund managers in which they pay a lower rate of capital gains tax on part of their investment profits, known as carried interest, rather than the higher rate of income tax. Now, she is suggesting a Labour government would allow private equity dealmakers to continue to benefit from a lower tax treatment on profits when their own cash is at risk. Her earlier comments unsettled the UK’s buyout industry and triggered fears of an exodus to jurisdictions where carried interest is still taxed at the lower rate of capital gains, City AM says. “I don’t think it is right that . . . what is essentially a bonus is taxed at a lower rate than employment income, when you’re not putting your own capital at risk,” she also told the Financial Times. “If you are putting your own capital at risk it is appropriate that you pay capital gains tax,” she added.

The Labour Party says it will open 350 banking hubs in towns and villages across the UK over the next five years, if it wins the General Election. A report by consumer group Which? has revealed over 6,000 bank branches have closed since 2015.

HSBC is warning that Labour’s plans to introduce a "genuine living wage" and strengthen workers’ rights risk triggering a surge in unemployment, stoking inflation, and pushing up mortgage costs. Labour has pledged to roll out a "New Deal for Working People" within 100 days if elected to Government, but the bank’s economists say any increase in the minimum wage beyond inflation risks yet another hike in costs for businesses. “This in turn could either push firms into reducing headcount and/or sustain lingering inflation pressures, keeping the Bank Rate higher for longer,” report authors Elizabeth Martins and Emma Wilks said.

Warrington Borough Council has been stripped of its credit rating by influential rating agency Moody’s after racking up nearly £2bn worth of debts and failing to supply sufficient information about its finances. Warrington has been run by Labour for more than a decade. “Moody’s is one of the most prestigious rating agencies in the world and gives independent credit scores to organisations seeking to borrow money from pension funds and insurers,” the Telegraph explains, adding: “Much like consumers hoping to borrow from a bank, a poor credit score makes it more expensive for companies and councils to secure cash. Removing Warrington’s credit rating entirely is likely to make it harder for the council to borrow in future because lenders will be increasingly cautious”.

Laybuy, the ‘buy-now pay-later’ firm, collapsed into receivership yesterday. The New Zealand fintech firm, which launched in 2017 and once boasted around 766,000 customers across the UK, Australia and NZ, put itself up for sale in April and was looking to delist from the NZ’s junior stock exchange CatalistCity A.M. says. However, in a statement, founder and managing director Gary Rohloff confirmed a buyer had failed to emerge and the payments company had voluntarily called in receivers in NZ. He pointed to the “economic downturn” and a subsequent squeeze on the retail sector in NZ and the UK as the reasons for the firm’s collapse.

Superdry has received court approval for its restructuring strategy, including a £10m equity raise underwritten by Superdry CEO Julian Dunkerton, to avoid going into administration. The majority of Superdry’s creditors, including landlords, had approved the rescue plan last week. The fashion chain, which has more than 90 stores in the UK, will also delist from the London Stock Exchange, where it’s shares are more than 90% down on when it first listed.

Home REIT's efforts to re-negotiate its £130m+ debt pile with lender Scottish Widows have failed, meaning the scandal-hit social housing fund will have to sell more properties to pay back lenders. The company's property portfolio comprises of 1,765 properties with a value of £314.1m. It has direct control of 1,193 properties. Trading in Home REIT's shares on the London Stock Exchange has been suspended since January last year after it missed the deadline to publish its annual report.

Mind Gym says it has noticed a “material decline” in clients spending on diversity, equality and inclusion (DEI) initiatives. The workplace training company said this “change in priorities” among its clients contributed to a 18% decline in revenue, to £44.9m, during the year to March. Chairman and founder Octavius Black claimed anti-Israel student protests on university campuses and Florida Senator Ron DeSantis’s so-called ‘war on woke’ had put a “sudden handbrake” on corporate diversity spending. The news sent London-listed Mind Gym’s shares plummeting as much as 32% in early trading yesterday, wiping £11m off its market cap. It closed almost 23% lower at 30p.

Ashtead has reported record revenue of $10.86bn (£8.4bn) for the year to 30th April 2024, up 12 per cent year-on-year. Operating profit rose 5% to $2.7bn (£2.1bn). Earnings before interest, taxation, depreciation and amortization (EBITDA) came in at $4.9bn (£3.9bn), up 11% on the prior year. The FTSE 100 firm rents heavy machinery to the construction industry, and is currently rumoured to be considering switching its primary listing to New York from London.

Aoti, a US healthcare group also known as Advanced Oxygen Therapy Inc, has raised £35.1m from its initial public offering (IPO) on London’s AIM sub-market, giving it a market capitalisation of roughly £140m. Trading began earlier this morning under the ticker “AOTI”. The California-based company was founded in 2004 and claims its woundcare technology reduces the need for amputations in patients by more than two-thirds.

UBS, the Swiss banking giant which took over Credit Suisse in a state-engineered deal last year, has offered to repay former clients of the collapsed bank 90% of the funds they invested with finance firm Greensill Capital. Credit Suisse provided some $10bn in loans via Greensill, but Greensill collapsed after a group of insurers led by Tokio Marine, which were insuring $4.6bn of Greensill’s working capital, stopped providing cover in July 2021. Defaults on loans totalling $5bn by GFG Alliance, owned by the steel magnate Sanjeev Gupta, are also said to have contributed to Greensill’s demise. UBS said the offer commenced on Monday and would run until 31st July, adding that it would take a $900m (£710m) provision in the second quarter to cover costs. “The offer aims to give fund investors certainty, an accelerated exit from their positions and a high level of financial recovery,” UBS said yesterday. In 2018, former Prime Minister David Cameron became an advisor to Greensill.

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