UK lowest effective Corporate Tax rate? Panama papers go online, slowing house prices, and new debt bubble warning

Tax

Russia and UK have lowest effective corporate tax rate – Russia and the UK offer companies the lowest effective tax rates among the world’s best economies, according to a new study by UHY Hacker Young. Firms in Russia pay business tax at 20%, while companies in the UK pay 21%, compared to the average corporate tax of 32% charged by the world’s seven largest industrial nations. Roy Maugham, tax partner at UHY, said the UK has one of the most competitive regimes in the world, benefiting UK-based companies of all sizes: “With further cuts planned over the next few years, the UK is looking to help its domestic company base grow, while at the same time making a play for more corporate investment from overseas”. The corporate tax rate is noted to be 25.3% across European economies and 27% in the other 31 countries studied by UHY.

Panama Papers database goes online – The International Consortium of Investigative Journalists (ICIJ) has released a database of documents from Panama-based law firm Mossack Fonseca, despite the firm issuing a “cease and desist” order last week. The documents list more than 200,000 shell companies, foundations and trusts set up in more than 20 tax havens around the world. The database excludes information and documents on bank accounts, phone numbers and emails. The move comes after 300 economists wrote an open letter urging world leaders to end the era of tax havens, arguing they only benefit rich individuals and multinational corporations and serve to increase inequality.

Taxman targets salaries worth weight in gold – HMRC is to crackdown on disguised remuneration schemes after it was revealed a number of people are being paid in gold bullion to avoid income tax liabilities on large payments, such as bonuses.

UK economy and markets

House price growth slowing down, says Halifax – Further evidence has emerged of a slow-down in UK house prices in April, as the Halifax said growth eased to 9.2% compared to last year. Compared with March, prices actually fell in April, by 0.8%, and a month ago, the Halifax said house prices were rising by 10.1%. Dr Howard Archer, chief economist at IHS Economics, said that uncertainty over the EU referendum was also likely to “rein in” housing market activity for the next few months. Martin Ellis, Halifax’s housing economist, said current market conditions remain very tight as the severe imbalance between supply and demand persists: “This situation, combined with low interest rates and rising employment and real earnings, should continue to push house prices up over the coming months,” he added. A record 165,400 UK properties were sold in March ahead of the tax changes, which was 11% more than the previous peak in January 2007, according to HMRC.

Other

New debt bubble warning – The Institute of International Finance (IIF) in Washington is warning that corporate debt levels now far exceed those of the pre-Lehman financial bubble. The global banking watchdog flagged a double threat: a five-fold rise in company debt to $25trn (£17trn) in emerging markets over the past decade, at the same time as record junk bond issuance in US and Europe, along with shockingly irresponsible levels of US borrowing to buy back shares and pay dividends. A split market has developed, the IIF said – large corporations are sitting on record levels of cash, estimated at $1.6trn in the US, $2.2trn in Europe, and $2trn in Japan while a sea of smaller firms are up to their necks in debt. Additionally, the IIF estimates that China’s total debt has reached 295% of GDP, and is still rising fast.

Christian Elmes, Partner

Christian Elmes trained at PwC and qualified as a chartered accountant in 1999. From there he moved 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. Christian 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. He is able to lead on tax efficient product development from inception through to completion. He has a 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, Albion & East Ltd, Camm & Hooper Ltd and Darwin & Wallace Ltd.

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