Focus on rising house prices boosting IHT bills, Brexit, and UK exports outpace global rivals


Rising house prices boost IHT receipts – HMRC collected £4.7bn in IHT in 2015/16 – a 22% increase on the previous tax year, when IHT receipts were £3.8bn. This was also the highest ever amount since the current tax system was introduced 30 years ago and almost double the 12% growth recorded the previous year, according to the figures by the ONS. Soaring house prices have dragged an increasing number of people into paying the tax, calculated at 40% of anything above £325,000 for individuals and £650,000 for couples. Critics argue that a tax initially intended to capture only the rich is now being paid by people who are not particularly wealthy but have seen their family home rise in value. The ONS said that the rise was also driven by a 6% increase in the number of deaths leading up to 2015-16 compared to the previous year. Regional figures show that the biggest chunk of IHT is paid in London and the South East. High property prices mean that the average IHT due per taxpayer in London was £223,000 and in the South East it was £176,000. This compares to £147,000 in Wales and £142,000 in the North West of England, the ONS said.  Meanwhile, the Telegraph’s Olivia Rudgard presents five little-known facts about IHT. She notes that: Receipts have almost doubled since 2009; over 400 estates owed more than £1m in tax in 2013-14; a large proportion of the estates which were due to pay IHT contained at least some cash; women pay more than men; and London and the South East pay as much as the rest of the country put together.

HMRC victory over Greene King – Greene King has lost an £8.7m tax-avoidance case brought by HMRC in a victory hailed as “significant” by Jane Ellison, financial secretary to the Treasury. The scheme, marketed by Ernst & Young in 2003, involved loans between group companies. The win could see HMRC recoup £30m from Greene King and others that used the tactic.

Alarm over plan to wipe Companies House records – Proposals to wipe records from Companies House after six years would mean the business failures of the likes of Dominic Chappell would make investigating the suitability of directors costly and difficult, writes Ashley Armstrong in the Telegraph. Ms Armstrong says even discussing such a move is worrying given how the high-profile collapse of BHS indicates just how important thorough record checking is. If Theresa May is serious about improving governance she should nip this idea in the bud.

Small business and enterprise

SME dividend payments up 31% on prior year – The UK’s small and medium-sized businesses paid out 94% of their profits as dividends last year, according to Moore Stephens – up from 63% the year before. Total dividend payments hit £28.3bn, from £17.5bn in 2014. The pay-outs came before former Chancellor George Osborne’s dividend tax allowance came into effect, thought to have damaged the ability of small businesses to reinvest their profits into growth and expansion. Mike Cooper, partner at Moore Stephens, said the changes could “distort” business owners’ behaviour, adding: “Politicians need to use tax policy to help entrepreneurs, rather than hinder them. Continuous changes may disrupt small businesses and force entrepreneurs to overhaul their business plans”.

UK economy and markets

UK forecast to avoid recession – The National Institute of Economic and Social Research (Niesr) expects the economy to contract by 0.2% in the third quarter following the vote to leave the EU, but to grow by 0.1% in the final three months of 2016. The think-tank said this would see the UK avoid a technical recession and that the BoE could boost the economy with a rate cute and further quantitative easing.

BoE prepares for zero growth forecast – Economists have predicted that the Bank of England will cut its growth forecast for 2017 from 2% to zero tomorrow. Governor Mark Carney is preparing for “Super Thursday” where he will outline the change to GDP, employment and inflation forecasts after the Brexit vote. Expectations are that the cost of borrowing will be reduced from 0.5% to 0.25%. Analysts have warned that such a move could see savings rates fall to zero, while the income levels from new annuities would also be lower. However, borrowers with tracker deals that are pegged to UK interest rates would see monthly costs fall from September.

UK exports outpace global rivals – The UK’s exports have grown at a world-beating pace for the first time in nearly a decade, according to figures from the ONS. The share of exports heading out of the EU also increased sharply in 2015. UK businesses sold £151bn of goods to countries beyond the EU last year, compared with just £134bn purchased by EU members.


Extra year for PPI claims could cost banks £1bn – Britain’s banks face another bill for PPI mis-selling of up to £1bn after the Financial Conduct Authority set a 2019 deadline for claims. The later deadline will be accompanied by an advertising campaign and is the first major decision announced by Andrew Bailey since he took over as chief executive of the regulator last month. “Putting a deadline on PPI complaints will bring the issue to an orderly conclusion in a way that protects both consumers and market integrity,” he said. Banks have already paid out £24.2bn in compensation to more than 10m customers with the top six banks making provisions totalling £34bn. Lloyds, which tops the list with £16bn set aside, said it was disappointed by the extended deadline.

Christian Elmes, Partner 

Christian Elmes trained at PwC and qualified as a chartered accountant in 1999, before moving to Morgan Stanley (2000-2002) as Associate in the Investment Banking Division (IBD).

He was appointed Director of Finance, Teather & Greenwood Investment Management in 2002 and moved with the Tax Efficient Solutions team to Smith & Williamson in 2004, becoming Deputy head of the department. He left to co-found Enterprise in 2011.

Over the last ten years, Christian has been responsible for developing a number of tax efficient products, particularly Enterprise Investment Schemes (EIS). He is able to lead on tax efficient product development from inception through to completion, because of his financial and tax background and commercial experience.

Christian is competent across a broad range of sectors including, leisure and hospitality, media, property and renewable energy.

Christian is a non-executive board member to a number of leisure and hospitality companies, Casper & Cole Ltd, Wright & Bell Ltd, Ruth & Robinson Ltd, Camm & Hooper Ltd and Darwin & Wallace Ltd.

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