- Insights
UK TAX
Weekly News 23rd Sep
Former Harrods boss accused of sexual assault and rape
Recently, in the BBC documentary Al-Fayed: Predator at Harrods, dozens of former employees accused Mohamed Al-Fayed, the former Egyptian-born owner of Harrods, of sexual assault and rape. Harrods, located in Knightsbridge, London, is one of the most prestigious department stores in the world, known for selling luxury goods.
Billionaire Mohamed Al-Fayed passed away in London in 2023 at the age of 94. During his life, he owned Harrods and Fulham Football Club (Fulham FC). His son, Dodi Fayed, tragically died alongside Princess Diana in a car crash in Paris during their romantic relationship. Mohamed Al-Fayed publicly claimed that the crash was no accident, accusing the British royal family of being behind it.
In the documentary, more than 20 women who worked at Harrods shared horrifying accounts of being sexually abused during the 25 years Al-Fayed controlled the department store. It is alleged that, at the time, Al-Fayed, then in his 70s, raped dozens of female employees. Harrods management reportedly did not intervene and even helped cover up the abuse claims. Some women said they felt pressured because of their positions at the company and shared the trauma they experienced due to Al-Fayed’s actions.
Harrods has set up a dedicated claims page on its website to help the women involved avoid prolonged legal battles.
>>Read More ….
National debt reaches 100% of GDP
Preliminary estimates from the Office for National Statistics (ONS) show that the UK’s public sector debt has reached 100% of the country’s annual GDP for the first time since the 1960s. The data reveals that the government borrowed £13.7 billion in August, bringing the total borrowing for the current fiscal year to £64.1 billion, £6 billion more than the Office for Budget Responsibility (OBR) had forecast.
National debt refers to the total amount borrowed by the UK government over time. This includes government bonds and other forms of borrowing. When national debt equals 100% of GDP, it means the value of the country’s entire annual economic output is equivalent to its debt.
The higher-than-expected borrowing in August is attributed to increased welfare spending and higher public service costs, including operating expenses and wage increases. Although such high debt levels don’t necessarily indicate an immediate economic crisis, they often raise concerns about the UK’s ability to manage debt repayment, economic sustainability, and resilience in times of crisis.
Economists have warned that excessive fiscal tightening could undermine consumer confidence, potentially harming economic growth and employment, and further worsening the fiscal situation.
However, despite high debt levels, as long as the debt remains sustainable, it may not lead to immediate negative consequences, such as a recession.
>>Read More ….
Corporate tax breaks cost more than revenue generated
According to official forecast analysis, the cost of a business tax relief scheme designed to encourage companies to purchase new machinery and equipment is £20 billion higher than the revenue it generates. This tax relief, known as ‘full expensing’, is projected to cost nearly £30 billion but is expected to generate only up to £10.5 billion in new investments.
Corporation tax is paid by UK-based companies and foreign companies with offices in the UK, based on their profits. Small businesses with profits below £50,000 pay a 19% tax rate, which increases as profits grow. Former Conservative Chancellor Jeremy Hunt announced the ‘full expensing’ measure in 2023, allowing companies to deduct investments in IT equipment and machinery from their taxable profits, aiming to address the UK’s low productivity. The Labour Party supported the measure at the time and is now considering making it permanent.
As this is only a temporary measure, the Office for Budget Responsibility (OBR) has stated that it is unlikely to lead to sustained changes in overall business investment. Instead, it is expected to boost investment over the next three years, after which it will likely decline. The Treasury has now calculated that if the tax relief were made permanent, it would cost nearly £11 billion annually. In 2023 alone, the tax relief amounted to £30 billion, but it stimulated no more than £10.5 billion in new investment, leaving a gap of nearly £20 billion between costs and generated revenue.
>>Read More ….
Rent increases outpace inflation by fourfold
Data from the Office for National Statistics (ONS) reveals that as of August, private rental prices in the UK have surged by 8.4%, nearly four times the inflation rate of 2.2%. The average rent for private housing now stands at £1,286 per month.
In England, London experienced the highest rental inflation at 9.6%, with an average monthly rent of £2,129, while in the North East, the average rent is significantly lower at £682 per month.
At the same time, the average house price in the UK rose by 2.2% to £290,000, marking the fifth consecutive month of annual house price inflation.
Real estate agency Jackson-Stops noted that ‘for the first time, house prices are reflecting a cautiously positive afterglow from Labour’s election victory and showing a promising picture for the start of Autumn…It is essential the new government introduces polices to address the supply and demand imbalance, but at a rational rate’.
>>Read More ….
Restaurant chain TGI Fridays files for bankruptcy
The UK operator of the global restaurant chain TGI Fridays, Hostmore, has entered administration due to massive losses and rising debt. As a result, all 87 TGI Fridays locations in the UK are at risk of closure, with 4,500 jobs on the line.
Earlier, the company had attempted to stabilise its finances through drastic cost-cutting measures, pausing expansion plans, making management changes, and selling off locations, but these efforts were not enough to save the business. Last week, Hostmore’s stock price plunged by over 90%. The company has put all 87 TGI Fridays restaurants up for sale, hoping to complete the process by the end of September, though it remains uncertain whether a buyer will be found. If the sale is completed, Hostmore is expected to liquidate and delist.
Since 2023, high inflation, rising loan rates, and shifts in consumer habits have led several major UK brands, including The Body Shop, Forma Brands, and Wilko, to declare bankruptcy. Other restaurant chains like Pizza Express and Byron Burgers have also faced financial difficulties. While some outlets have closed, certain brands have managed to survive through acquisitions or restructuring by cutting jobs.
>>Read More ….
