Marketing Newscast

(Edited 25 November 2024)

Budget criticism just keeps coming. Michael Summersgill, CEO of fund manager AJ Bell, says plans to make inherited pension pots subject to Inheritance Tax risk “fundamentally undermining” the whole pensions system, and that the proposed changes are “arguably the most complex and costly way of raising tax from unused pensions on death”. Chancellor Rachel Reeves hopes to raise nearly £1.5bn annually by 2030 from the policy but Summersgill has highlighted how higher-rate taxpayers will face an effective tax rate of 64% on inherited pensions, because they would be subject to both inheritance and Income Tax. Recipients could also face delays receiving them, as they would have to go through probate before being distributed from April 2027. “At what will be an emotionally challenging time for those close to the deceased… the process of distributing much-needed support will end up stalled in a much more complicated probate process,” he wrote in the Financial Times, and suggestted that instead the Government abolish rules enabling beneficiaries to avoid income tax on a pension pot if the pensioner dies before the age of 75. Meanwhile, retail tech boss Roy Horgan, CEO of Euronext-listed Vusion Group, has called Reeves’ Budget a “land grab” that demonstrates “short-term thinking” and will hamper the already struggling retail sector. The “stealth tax” rises to employer National Insurance contributions (NICs) will be inflationary and prevent firms from giving as many staff quality jobs, he warned, and that could mean less money for The Treasury. A Savana poll published on Friday showed Rachel Reeves’ personal approval ratings have fallen from +7 at the end of July to -18 now. 

“If the retailers bring more people into the tax bracket through PAYE, the exchequer does better anyway,” Horgan told City AM in an interview. Also, Rain Newton-Smith, CEO of the Confederation of British Industry (CBI), will today warn in her speech to the business lobby group’s annual conference that the Government’s tax hikes will squeeze profits, damage investment and “hit growth”. The CBI has released details of a poll of 266 business leaders which suggests 62% will respond to the Budget by slashing hiring plans; almost half say they will be forced to lay off staff; and 46% will delay pay rises for their workforce. “The rise in National Insurance and the stark lowering of the threshold caught us all off guard,” Newton-Smith will say, adding: “Set alongside the expansion and rise of the National Living Wage… and the potential cost of the Employment Rights Bill changes, they put a heavy burden on business… (Firms) are looking with heavy hearts to cut training and investment, delay decarbonisation projects, or pass on costs to customers”.

UK business output appears to have contracted in November for the first time in more than a year.  According to S&P Global's flash UK composite output index - which measures activity in both the manufacturing and services sectors - fell to 49.9 from 51.8 in October. This marked the lowest level since October 2023 and was below the 50.0 mark that separates contraction from expansion. The flash manufacturing purchasing managers' index declined to 48.6 in November from 49.9 the month before, hitting a nine-month low. Meanwhile, the services PMI business activity index printed at 50.0, versus 52.0 in September. This was a 13-month low. “The fall in the Composite PMI suggests that tax hikes announced in the Budget seem to have restrained some private sector activity,” Elias Hilmer, an assistant economist at Capital Economics, told City AM.

The Welsh Government will today set out plans to tax visitors who stay overnight in the country. The plan is to give councils the power to apply a “small additional charge” to hotel and other accommodation bills to support tourism initiatives. The Conservatives have attacked the idea, saying it risks deterring visitors from coming to Wales. The proposed Visitor Accommodation Bill will also launch a registration scheme for accommodation providers to make sure they all follow the same rules and standards.

Trinity College Cambridge, the university's wealthiest college, is putting its long-term lease of London's O2 arena up for sale, Sky News has learnt.  Trinity, which ranks among Britain's largest landowners, acquired the site in 2009 for a reported £24m. Operated by Anschutz Entertainment Group, it has played host to a wide array of music, theatrical and sporting events over nearly a quarter of a century.

The Sunday Times reported yesterday that London City, Birmingham, and Bristol Airports are potentially up for sale. Their Ontario Teachers’ Pension Plan (OTPP) owner is also said to be in talks with minority shareholders over its stakes in Copenhagen and Brussels’ airports. The Canadian pension fund owns stakes in each of the five airports ranging from 25% - 70%. Shareholders in its portfolio, which could be worth more than £10bn, have a 30-day “right of first refusal,” but could also opt to sell, the newspaper said.

Ryanair says it will appeal a €108m fine handed down by Spain's Ministry of Consumer Rights for alleged "abusive practices" including charging customers additional fees for carry-on luggage, reserving seats or printing out boarding passes. Ryanair said it has instructed its lawyers to immediately appeal the "unlawful and baseless" fines, which CEO Michael O'Leary claims have been "invented [...] for political reasons". "Ryanair has for many years used bag fees and airport check-in fees to change passenger behaviour and we pass on these cost savings in the form of lower fares to consumers. [...] These illegal Spanish fines, which are based on an ancient 1960's law which predated Spain joining the EU, would destroy the ability of low cost airlines to pass on cost savings to consumers via lower fares," he said, adding that the success of the budget airline’s business model is entirely due to the freedom to set prices and policies without interference from national governments. easyJet and IAG's Vueling have also been fined, with the three airlines facing €179m in penalties in total.

Marks & Spencer says it will cut prices in its overseas stores to restore their competitiveness, after CEO Stuart Machin said they were “way out of kilter on price”. He pointed to an M&S stores in Singapore which was around a third more expensive than its rivals. “Literally the turnover is so low, the shop looks immaculate – because we just don’t sell anything,” he said at an investor day last month, now reported by The Telegraph. According to M&S’s latest annual report, around 30% of M&S stores sit within its international business, although the division only accounts for around 8% of M&S’s overall sales. The FTSE 100 firm has 434 international stores across Asia, the Middle East and Europe, and 1,058 in the UK stores.

Sex toy and lingerie chain Ann Summers, which is 100% owned by the Gold family, is close to calling in advisors from Interpath to explore options for the business which could include a partial or majority sale, Sky News claims. Last week, the chain posted a £3.9m annual losses and debts of £12.5m.  

Ineos owner Sir Jim Ratcliffe is pumping more money into his loss-making leather jacket brand Belstaff, The Telegraph reports, noting that the firm has just racked up a further £18m annual loss. Sales of the jackets, which sell for as much as £2,125, slumped almost 4% to £57.6m in 2023, Belstaff’s latest accounts show, meaning the company has now failed to turn a profit for the six consecutive years. Belstaff also posted an £18.3m loss last year. However, Belstaff directors say Ineos had indicated that it would keep making funds available and it would also not seek repayment of earlier loans in excess of £300m.

Journalists will be combined across The Mirror newspaper and glossy magazine OK! to cut costs and avoid any further job cuts at owners Reach, it was revealed late on Friday. “The decision will raise eyebrows given the gulf in output between a Left-leaning newspaper and a glossy magazine focused on celebrity gossip and showbiz news,” The Telegraph’s Senior Business Reporter James Warrington writes.