Following the autumn budget announcement yetrerday, Finance Monthly has heard the initial reactions from experts at top accountancy firm Crowe UK. From Corporate Finance to Small Businesses and IR35, there are tax implications for many…
Matteo Timpani, Corporate Finance partner:
Entrepreneur’s Relief (ER) remains an attractive, and essential, tax incentive that drives UK innovation and entrepreneurship. That said, it is disappointing to see amendments made to the relief which may impact the ability of certain individuals to benefit from it in the short term. There will be a number of mergers and acquisitions (M&A) transactions currently in progress which will likely be put on hold to ensure participants are able to qualify for Entrepreneur’s Relief in due course.
This change only emphasises the importance of business owners taking specialist advice, and being prepared, long in advance of the time they are considering succession and exiting their business. We await the specific details of when this change will be implemented but anyone who is considering selling their business in the next 12 months, and is unsure if they, their management team and/or other shareholders will qualify for ER, should seek advice now and consider immediately the implications of this change.
Tom Elliott, Head of Private Clients:
It is not surprising to see The Chancellor reaffirm the government's commitment to Entrepreneurs' Relief, albeit with tighter conditions (qualifying period doubled to two years). However, it might have been more effective if the minimum shareholding requirement was abolished altogether – this would incentivise all employee shareholders and not just the C-suite.
The changes to Capital Gains Tax (CGT) reliefs for the sale of main residences look like an attempt at modernisation. Lettings relief has changed so as not to apply to the AirBnB model - relief applies only for shared occupation. The shortening of the ‘period of absence’ from 18 to nine months for Principal Private Residence relief will need to be monitored closely, as any slowdown in the housing market (where it may take more than nine months to sell) may result in an overall reversal.
Rebecca Durrant, Private Clients partner:
It was pleasing to see the personal allowance and higher rate tax brackets raised a year early, but it will be interesting to see whether the Chancellor treats this as a ceiling. Rates could now be frozen for following years, which would turn the tax cut into a hike very quickly. In the mid to long-term, this may not protect the inflationary impact that a no deal Brexit may have.
Phil Smithyes, Managing Director, Crowe Financial Planning
The move to raise the personal tax allowance to £12,500 and raise the higher rate tax threshold to £50,000 from 6 April next year is a move that should be welcomed by most pensioners, making their pension savings go that much further.
Under the pensions ‘freedom and flexibility’ rules, individuals could take up to £16,666 each tax year from their pension fund before they begin paying income tax. This is achieved through a combination of 25% tax-free cash (£4,166) and the new £12,500 personal tax allowance. Careful planning will help pensioners money go that further and minimise their liabilities to tax in retirement.
Susan Ball, Head of Employers Advisory Services:
In April 2017, the government reformed the IR35 rules for engagements in the public sector and early indications are that this has resulted in an increase in compliance within the public sector. This will now be replicated for the private sector, but a reasonable implementation period is vital so the effective date of 2020, and the fact the rules will only be extended to large and medium sized private businesses, are both sensible steps. The Chancellor clearly took on board the feedback from the consultation process over the summer. Engagers should start planning now based on the experience of the public sector in order to have an effective procedure in place for the start date of April 2020.
Laurence Field, Corporate Tax partner:
The Chancellor's statement was made against a background of political uncertainty, mixed economic signals and an increasingly protectionist agenda from many of our trading partners. Tax is one of the most politically high profile things a government can do, and this was one of the most political budgets a Chancellor has had to deliver for decades.
The UK doesn't raise enough tax to keep providing public services at the current level, especially given the aging demographic. A tax system that raises more tax will need to be more efficient, perceived to be more fair and find new 'pockets' of wealth or bad behaviour that can be taxed without political risk.
An autumn budget also has the advantage of kicking the can down the road given that the majority of changes will only kick in from April next year if not later. However, this is the first glimpse we have of the type of post Brexit fiscal landscape the government wants to create.
The announcement of a potential digital services tax (DST) makes sense. Global companies need to be seen to be paying their 'fair share'. They don't have votes, so are an easy target. Playing tough with the digital services tax is politically attractive even if this causes conflicts with other tax jurisdictions. It is unlikely such measures will find much opposition in Parliament given the ground has been well prepared. How our trading partners (and particularly the US) react will be the real challenge. Retaliatory measures will not help the British economy. Therefore by outlining a timetable to introduce measures in 2020 he has provided cover for trying to get international agreement. Talking tough, but deferring action makes other parts of the Budget more palatable.
Elsewhere, plastics have found themselves in the environmental firing line and it was an easy, and politically popular decision, to try and find ways of taxing its use. Requiring more usage of recycled plastics is a way of stimulating that industry while being seen to be tough on pollution. The challenge with all sin taxes is that if they are too effective, the source of revenue will dry up. The damage that plastics can do is all too obvious, the Chancellor is no doubt sincere in his desire to reduce our use, but would no doubt be grateful if industry doesn't take action too quickly.
Research carried out by Altodigital has revealed that two third (66%) of SMB IT executives admit that that they have significant IT challenges within their business. In comparison, an overwhelming 97% of those IT bosses working in larger organisations indicated having ongoing issues, suggesting very different attitudes to technology between small and larger firms.
The research also explored the differing priorities of these two business types and found that ‘maintaining existing IT infrastructure’ was a top priority for 40% of corporates while 32% unsurprisingly outlining ‘security and compliance’ as a top concern. It was also interesting to note that 25% of respondents listed ‘finding skilled staff’ as a big worry.
In terms of SMB organisations, 26% of IT executives listed ‘security and compliance’ as a major concern while budgetary constraints was close behind with 23%, something that was scarcely acknowledged by corporate respondents.
The poll organised by the office technology solutions provider, Altodigital was formed of two individual studies, one that polled 100 IT decision makers from corporate UK companies with over 500 employees while the second survey included firms with less than 500 employees.
Alistair Millar, Group Marketing Manager at Altodigital said: “It is worrying that such a high proportion of SMB IT Executives feel they do not have any IT issues, because it is likely that they are missing a trick, especially when the issue or security and compliance is something that requires continual upgrades in technology.”
The survey also indicated cultural differences when it came to technology, with 58% of SMBs revealing that they simply didn’t see the need for a bring your own devices policy whereas 72% corporates listed it as a major concern. These contrasting opinions were also clear when it came to discussing print policies, an overwhelming 78% of SMB IT managers admitted that they had no policy in place while 57% of corporates said that they review their print strategy every year or less.
Within these results, a quarter of respondents in large firms said that their printing plan was reviewed more frequently than every six months and 15% reported once a year.
“It is very surprising to see that a large majority of SMBs fail to have a print policy in place because managed print services are widely known to provide benefits for both small and large enterprises. SMBs must consider what services might help improve business efficiency and productivity on a regular basis, this point is clearly understood by large corporations who regularly review operations such as their print strategy on a regular basis,” added Millar.
From diesel tax penalties and calls to rule out a further rise in insurance premium tax, to housing ambitions and planning laws, UK Chancellor Philip Hammond has faced a lot of pressure this week, ahead of the announcement due tomorrow.
Below Finance Monthly has heard from a number of source in the industry on what they expect, predict and would like to see come from the announcement, in this week’s Your Thoughts.
Adam Chester, Head of Economics, Lloyds Bank Commercial Banking:
Tomorrow’s budget will have to strike a difficult balance. Improvements to the public finances had given some room to ease policy, but that will be squeezed when the Office for Budget Responsibility revises down its growth forecasts on Wednesday.
The commitment to reducing the so-called structural budget deficit to below two% of national income by 2020-21, gives us a framework to assess how much room there is for any giveaways.
At the March Budget, the structural deficit was forecast to undershoot the two% target by £26bn. It’s now set to fall £6-8bn short of the March forecast, mainly due to stronger-than-expected tax receipts.
However, the OBR warned it will dial down its productivity forecasts, and we estimate a 0.4% downward revision would increase the structural budget deficit by around £15-£20bn.
On top of this, new funds are being sought for areas including Northern Ireland, public sector pay and the NHS, which would likely mean breaching the two% cap.
However, we suspect any available wiggle room would be used to fund a modest fiscal giveaway in order to keep borrowing and debt projections on track.
Matthew Walters, Head of Consultancy & Data Services, LeasePlan UK:
Fleets have been subjected to a lot of change in 2017. April saw the introduction of a new Vehicle Excise Duty system and new rules for Optional Remuneration Arrangements. July saw the publication of the Air Quality Plan, with its promise of Clean Air Zones around the country. And now it’s the turn of the Chancellor’s first Autumn Budget.
This Budget cannot add to the uncertainty facing fleets and motorists. In fact, it should provide clarity. The Chancellor must take the opportunity to reveal the rates of Fuel Duty for next year, as well as the rates of Company Car Tax for 2021-22 – and preferably beyond.
We’d like to see the Chancellor maintaining the freeze on Fuel Duty rates for another year – or perhaps even cutting them for the first time since 2011.
In addition, the UK Government is working hard to encourage the uptake of Ultra Low Emission Vehicles (ULEVs). We will have to see what incentives the Chancellor has up his sleeve.
Stephen Ward, Director of strategy, the Council for Licensed Conveyancers (CLC):
An Englishman’s home may be his castle, but purchasing that castle, family home or two bed flat is an archaic process that needs to be updated. The conveyancing market has never been in more need of attention and next Wednesday’s autumn budget presents Philip Hammond with a real opportunity to let the genie out of the lamp and demonstrate a real commitment to innovation in the property transfer process. We have three wishes for next week, namely:
James Hender, Partner, Saffery Champness:
Stagnating productivity means that any rabbits which the Chancellor wishes to pull out of his budget hat are not looking too healthy. OBR forecasts have eaten into the £26bn headroom the Chancellor thought he had, and though the expectation may be that Mr Hammond will spend to win some political capital, any tax gift will come at a price, and is likely to be subsidised at someone else’s expense.
The government is arguably stuck between a rock and a hard place on corporation tax. A fine balance will need to be struck between ensuring the UK demonstrates that it is open for global business, and being publicly seen to tackle any perception of big business not paying its way.
In this climate, the 2020 commitment to 17% Corporation Tax may be looked at again, and we can certainly expect rhetoric, if not concrete action, to further reinforce the government’s position in taking a central role on international tax transparency and anti-avoidance.
On appealing to younger voters: This is perhaps one of the most politically-charged Budgets of recent years, with many predicting that the Chancellor will use the occasion to try and appeal to a younger generation of votes. If Phillip Hammond is as bold as some have called for him to be, the implications of this political move on taxpayers could be significant.
Michael Marks, CEO, Smoothwall:
After Philip Hammond’s pledge in last year’s Autumn Statement to invest £1.9bn in cybersecurity, we can expect further funding (or at least reference) to this issue as the cybersecurity landscape heats up. Following a year that included the biggest cyberattack on the NHS and the Petya malware attack across the continent, cyber security needs to be an absolute priority for investment; without extra funding and protection, the Government risks undoing a lot of the hard work. So far, the near £2bn cyber windfall doesn’t seem to have had quite the desired impact.
Along with cyber security, I would like to see continued investment in the Enterprise Investment Scheme (EIS). It’s thought that the EIS investment may be reduced from 30% to 20%, thereby reducing entrepreneurial growth, and the UK could suffer consequently in the long term. As a country with a great track record of innovation, reducing investment in this scheme will have a detrimental impact on driving technology and business growth at a time when we need more people to ‘take that step’.
Stuart Weekes, Tax Partner, Crowe Clark Whitehill:
We would welcome a simplification of the rules and the removal of one of the two sets of Patent Box incentive rules as part of tomorrow’s announcements.
Very few companies are taking advantage of Patent Box incentives, which tax the profits from patented products at 10%, a nine-percentage point discount on the current 19% rate of tax. Many companies do not know about this and, for those that do, the complexity of the legislation has been a major barrier to making a claim. Once the UK exits the EU, will the government improve the benefit of the Patent Box, especially as the UK Corporation Tax rate will drop to 17%, making the margin for the Patent Box less attractive than it might otherwise be? Will this prompt a cut in the applicable Patent Box tax rate from 10% to 8%?
Chris Wood, CEO, Develop Training:
The UK Government has recently published an independent review concerning the increasing applications for artificial intelligence (AI). Its recommendations focus largely on the provision and development of training and education in academia and for master-level and PhD students. Support is recommended for organisations such as, and amongst other, the Royal Academy of Engineering, the Alan Turing Institute, and the Engineering and Physical Sciences Research Council. AI is likely however not only to influence academia but, over the next 10-30 years, affect almost all of the current activities we perform at work and at home.
The current skills shortage, felt most keenly in the utilities, construction and engineering sectors is the end-result of under-investment on the part of both government and industry over the last 30-40 years. It is inconceivable, and somewhat terrifying, that this will continue into the mid-21st century particularly against a backdrop of such monumental change. Therefore the 2017 budget should include provision not only for a greater understanding of AI from an academically-driven research perspective but also from that of every individual. Children, school-leavers and those who will be in employment for the next 30-40 years must be educated in how AI is likely to affect their jobs, careers and lives. To achieve this the government would do well to establish a national institute for the promotion, understanding and application of AI for the benefit of all.
Mark Palethorpe, CFO, Cox Powertrain:
There are Government incentives for small innovative businesses like ours, but the Patient Capital Review has promised to address the need to encourage long-term investment in step-change innovation. For some people, the investments required by smaller innovators are just too small to get excited about and, for others, investment levels are too big for the risk. You can get caught out whatever size you are. Results of the Patient Capital Review are expected to be announced as part of the Autumn Budget and we’d like to see more opportunities for investment in innovation. We’d welcome an increase in the cap that exists for tax relief investment schemes like EIS, which has worked really well for us but does limit the amount an individual company can invest.
Nigel Wilcock, Executive Director, the Institute of Economic Development:
For the good of the economy, in tomorrow’s announcement on the UK Autumn Budget we need clarity on the structures and budgets for elements of the Industrial Strategy; clarity on how Structural Funds will be replaced for regions and clarity on local authority funding – how the business rate retention mechanism and re-allocation system will work. Specifically, we are seeking commitments from the Chancellor to transport infrastructure that equalises expenditure per head between regions, greater recognition of the social care costs falling on local authorities and funding for state aid interventions for business. We also recognise that National Insurance contributions from employers need to be looked at – it is an important economic issue that variations in different types of employment contracts are allowing corporations to be avoiding contributions when the economy is at full employment. The tax take of the economy is increasingly disconnected from the level of activity.
Damian Kimmelman, CEO, DueDil:
The abnormally low level of interest rates could be weighing on productivity growth by allowing weak and highly indebted firms to survive for longer than they normally would, by alleviating the burden of servicing their debts. Better information is needed to identify these firms, understand their business and support those with potential.
We have seen the government put their full weight behind opening data initiatives, such as Open Defra, to huge effect. DueDil would like to see the government put their full weight behind Open Banking and ensure that all of the CMA 9 banks (and beyond) open up as much banking data as possible to stimulate innovation in financial services and put the UK at the fore-front of Open Banking globally.
The UKEF committee has pledged to continue supporting exports and export finance. More interestingly, they have pledged that they will digitalise and standardise the application and on boarding process for businesses applying for export financing. DueDil would like to see the government to fund a competition to build a solution that would support the digitalisation of UKEF, in order to ensure that SMEs can painlessly and efficiently access a market of export financing and to ensure the ongoing success of SMEs following Brexit.
William Newton, President & EMEA MD, WiredScore:
The UK has the largest digital economy of any G20 nation, but it is important that technological skills and innovation continue to be employed across a range of industries. The service sector, for example, currently accounts for the greatest share of hours worked at lower productivity levels in the UK. Therefore, digitising existing processes in this sector presents a massive opportunity to address this productivity concern.
If the Government is to enable increased productivity, it must ensure that the existing generation has the necessary skills to meet the demands of modern industry. We would like to see a policy on business rates incentives for organisations who can prove they are investing in their workforce's digital skills.
Earlier this year, the Government announced its intention to support business rate reliefs on new 5G Mobile and full fibre broadband in the Telecommunications Infrastructure Bill. This proposal was received favourably by network providers, and we are now witnessing commitments such as that made by Openreach chair Mike McTighe confirming a plan to bring fibre to 10 million premises before Christmas. As such, the impact of business rates incentives has already been shown to be successful in spearheading improvements to the country’s digital infrastructure. We now need to see digital skills getting the same treatment.
Katharine Lindley, Chartered Financial Planner, EQ Investors:
It could be a tricky Budget for the Chancellor with limited legislative time due to ongoing focus on Brexit. But first one of current Parliament so generally Chancellors like to increase taxes and hope people forget by the next general election. However, minority government makes controversial changes difficult:
Mark Tighe, CEO, Catax:
The UK’s reputation as a world leader in Research and Development is essential to the welfare of the British economy as the Brexit process gathers pace.
In order for these smaller firms to compete on the world stage they must be innovating - which can be expensive. As it stands, current R&D tax credit legislation allows SMEs to take the risk of developing a new product, service or process - without undue worry over the financial impact if it fails or is never used. This creates a fertile environment for businesses to experiment and grow and supports the economy moving forward.
Mrs May used her speech at the CBI earlier this month to call on business to innovate more. She’s absolutely right to do so. The key now is making sure Philip Hammond follows through and makes sure the Government properly supports the firms that do.
Ed Molyneux, CEO and co-founder, FreeAgent:
Assuming that the VAT threshold is lowered - as some reports are suggesting - a huge number of contractors, freelancers and micro-business owners would be faced with a significant new administrative and financial burden.
It’s very unfair to position freelancers and contractors as not being on a level playing field with those who are employed. These business owners have none of the employment rights or the security that employed workers have and there must be some recognition for that - unless the government wants to slow the growth of this very important part of the UK economy - representing more than 95% of the UK’s 5.5 million businesses.
We would like to see some positive news in the Budget for the micro-business sector; whether it’s new legislation to help them overcome the chronic issue of late payment, easier tax rules to navigate or simply recognition of the recent Taylor Review and the ongoing status of those working in the gig economy. Freelancers and micro-businesses play a huge role in our economy - it’s time the government started supporting them.
Steven Tebbutt, Tax Director, MHA MacIntyre Hudson:
There’s a growing expectation that Entrepreneurs’ Relief will be attacked as part of the Autumn Budget 2017, which will prove an unpopular move with business owners and aspiring entrepreneurs. Such a change might appeal however to younger generations who feel that wealthy business owners shouldn’t benefit from such a generous tax saving measure.
The Government has already introduced “anti-phoenixing” rules to combat business owners abusing the relief by extracting profits through liquidation, only to resume the same business, sometimes multiple times or even ad infinitum. However, there remains a number of planning opportunities which the Government could still look to limit or close.
For example, it would be relatively simple for the Government to amend the legislation so that qualifying conditions have to be met for, say, five years, rather than the current one year which generally applies. This would immediately make it more difficult to structure disposals in advance of a sale to secure Entrepreneurs’ Relief, as business owners looking to sell would have far less opportunity for eleventh hour planning. Such a change would help ensure that only business owners meeting the conditions over a substantial period qualify for relief.
Robert Gordon, CEO, Hitachi Capital UK:
We know that clean air is on the agenda, as we have seen the Government proactively move towards legislation aimed at tackling the UK’s pollution problem, therefore we fully expect that tomorrow’s announcement will include some form of punitive measure towards diesel vehicles.
Growing uncertainty from consumers around the future of diesel vehicles has already fuelled a rapid decline in the market, with October sales falling by nearly a third compared to last year and any additional deterrent could prove to be decisive, in encouraging a phasing out of diesel vehicles altogether.
If this happens, the Government must be prepared to outline how it plans to fund the infrastructure improvements required, to give businesses and consumers the confidence to make the transition to vehicles powered by alternative fuels at a faster pace than we have seen to date.
Jonquil Lowe, Senior Lecturer in Economics and Personal Finance, The Open University:
The Chancellor is expected to follow an Office of Tax Simplification (OTS) recommendation to reduce the VAT threshold, currently £85.000, possibly as low as £25,000. This must look tempting since it could bring up to £2 billion into the government coffers, sucking 1.5 million business minnows into the VAT system. Depending on whether traders can pass the tax on to customers and who their customers are, this extra tax will be paid partly by firms and partly by households through higher charges for their plumbers, builders, taxis and hairdressers.
Quite apart from paying the tax, HMRC has estimated the cost per business of dealing with the VAT admin is £675 a year. Moreover, if there is no change to the exemption level for Making Tax Digital, currently set at the VAT threshold, from April 2019 those small businesses will also suddenly find themselves sucked into mandatory quarterly digital accounting.
By extending the VAT base, cutting the threshold narrowly skates around the Conservative Manifesto promise not to raise the level of VAT. And, no doubt, it will be dressed up as a tax avoidance measure aimed at traders operating in the informal economy. But make no mistake: this will be a stealthy and substantial tax rise.
Martin Ewings, Director of Specialist Markets, Experis:
As we await the Chancellor’s Autumn Budget with anticipation, the focus must be on driving growth in key areas and ensuring the long-term economic prospects of a post-Brexit Britain. Increased infrastructure spending is expected to be one of the pillars of the budget, injecting regions around the country with much-needed jobs and investment. But we must have the skills in place if the nation is to deliver on such projects, both now and in decades to come. The recent announcement of £21m to boost regional tech hubs around the country is a positive step, but more needs to be done if we are to close the ever-widening skills gap.
Digital investment will be an important component of this, and new technologies could hold the key. Philip Hammond is poised to focus on AI (£75m investment), electric cars (£440m investment) and 5G (£160m investment), while also pledging £76m to improving digital and construction skills more widely. With so many different priorities, it’s important not to lose sight of nurturing future talent. The Cyber Discovery programme is a great example of what needs to be done. The £20m government initiative, announced on Saturday, will aim to encourage and inspire 15-18-year-olds to enter the cyber security industry via a comprehensive curriculum. There will be three million unfilled jobs in cyber-security by 2021, but investing in programmes like this could go a long way to help ministers and businesses plug the UK skills gap, both now and in the future.
Craig Harman, Tax Specialist, Perrys Chartered Accountants:
Following the introduction of the help to buy ISA, first time buyers could once again be one of the winners from the budget as the chancellor is expected to announce changes to Stamp Duty Land Tax. This could include either a reduction in the rate for first time buyers or even a ‘holiday’ period providing a complete exemption for those able to benefit. It has even been suggested that there could be a fundamental overhaul by making the seller liable for Stamp Duty instead of the purchaser. This would benefit any individuals moving to a more valuable property as the liability would be based on the lower value of their current home.
Tax relief on pensions has been a bit of an easy target over the past few years with both the annual and lifetime allowance significantly reduced. It is likely that we will see a further cut in the tax relief available on funding for retirement. Some have even suggested a complete change to an ‘ISA’ like system, however this may be a step too far.
Individuals with significant dividend income have been penalised heavily over the past couple of years and this may be set to continue with many predicting either a cut in the tax-free dividend allowance or an increase in the tax rate.
Aziz Rahman, Founder, Rahman Ravelli:
The Paradise Papers have placed the issue of non-payment of tax back on the news agenda at a time when the Chancellor is announcing his tax priorities.
A large part of the Chancellor’s job is to assess and determine what taxation can be brought in from business. And in the current climate, everyone in business is under scrutiny to ensure they are paying what they should. This scrutiny can only increase if new or heavier taxes are announced tomorrow.
This may seem alarmist. But the Criminal Finances Act, which only came into effect two months ago, makes companies criminally liable if they fail to prevent tax evasion by anyone working for them; even if they were unaware it was happening. They can face unlimited penalties.
If businesses are to avoid prosecution, they must be able to show they had reasonable measures in place to prevent such wrongdoing. To ensure this is the case, they must review their practices and procedures to minimise risks.
This means ensuring staff are aware of the legislation regarding tax offences, having procedures in place for monitoring workplace activity and introducing procedures so that suspicions of wrongdoing can be reported in confidence.
The government is under huge pressure to tackle the non-payment of tax. At a time when the government is outlining its tax priorities, it would be foolish for those in business to fail to make sure their tax affairs are legal and above board.
We would also love to hear more of Your Thoughts on this, so feel free to comment below and tell us what you think!
Millennial leaders are set to shake up traditional company management as they focus on building businesses based on both profit and purpose, new research from American Express has revealed.
Redefining the C-Suite: Business the Millennial Way, surveyed over 2,300 global leaders and Millennial managers - the future leaders of business - to better understand how businesses will change as Millennials rise to senior management roles. The findings also provide an insight into how business leaders today can set their companies up for success in the future.
The research found that while over half (56%) of Millennials surveyed in the UK said that a C-Suite role is attractive to them, and that they are more likely than their Gen X counterparts to want a job that gives them status, Millennials also indicated that they want to shake up traditional business leadership.
75% of Millennials think that successful businesses of the future will see management look beyond the usual models of doing business and be more open to collaborating with new partners. Millennial professionals also think that teamwork is a more important quality in leaders than Gen X-ers, suggesting that the C-Suite of the future will promote a much flatter structure in the organisations they lead. Millennials also ranked passion as an important quality in leaders (30%) much more highly than their Gen X counterparts (19%).
As part of their C-Suite shake up, Millennial leaders will put employee wellbeing at the top of their agenda. When asked what the biggest challenges are to businesses of the future, Millennials’ top answer was paying employees fairly (49%), followed by retention of talent (40%). 74% of Millennials also say that successful businesses of the future will need to support employees outside of work, compared to just 67% of Gen X-ers.
The research also found that while the majority (76%) of future Millennial leaders think that businesses of the future will need to have a genuine purpose that resonates with people, they also recognise the importance of driving a profit – something often perceived as being at odds with doing purposeful business.
According to the research, 63% of Millennials say that it is important for them to be known for making a valuable difference in the world, and Millennials are more likely to invest in CSR when running their own businesses (58%) compared to their Gen X counterparts (50%).
At the same time, UK Millennials were found to have a keen eye on maximising shareholder profit, with 53% of Millennials saying that shareholder profit will be important for the success of businesses in the future compared to 46% of Gen X-ers. To achieve success in the future, 71% of Millennials also think that businesses will need to manage costs tightly, and 77% say that financial transparency will be important.
Commenting on the findings, Jose Carvalho, Senior VP and General Manager at American Express Global Commercial Payments Europe said, ‘Millennials are demanding more from the businesses they work for – and will come to lead. This is setting the stage for an evolution of the C-Suite, where they will seek to put both profit and purpose at the heart of their businesses whilst also structuring them in a way to ensure tight cost management and efficient processes.
Jose continued, ‘This offers valuable insight for today’s business leaders as they seek to future proof their organisations and prepare for Millennial leadership. At American Express, we are dedicated to providing payment products and services that are designed to help companies effectively evolve and navigate change to ensure they continue to get business done now and in the future.’
(Source: American Express)
Uber is close to securing an investment deal with Softbank, which if succesful, could amount to £10bn according to reports.
TechCrunch were given the following statement: “We’ve entered into an agreement with a consortium led by SoftBank and Dragoneer on a potential investment. We believe this agreement is a strong vote of confidence in Uber’s long-term potential… strengthening our corporate governance.”
Uber have said the money is going to aid them in their international expansion and technological advancements. The aim of the expansion is partly due to the competition they are currently experiencing.
As well as an initial $1bn investment, Softbank will attempt to buy up £6.8bn ($9bn) worth of shares, resulting in a total stake of 14% in Uber. However, this is reliant on the agreement of a fairly complex tender offer.
The tender offer is set to take place on November 28th and could go on for 20 business days, making it possibly the biggest secondary transaction ever.
Given that any deal would be reliant on existing Uber shareholders selling their stakes, the process will require more work before it can be finalised. To help spread the word about their tender offer to existing shareholders including venture capitalists and ex-employees, Uber plan on putting adverts into newspapers.
According to TechCrunch, the following statement was given to reporters via Softbank on behalf of Rajeev Misra, CEO of SoftBank Investment Advisors: “After a long and arduous process of several months it looks like Uber and its shareholders have agreed to commence with a tender process and engage with SoftBank. By no means is our investment decided. We are interested in Uber but the final deal will depend on the tender price and a minimum percentage shareholding for SoftBank.”
The statement made by Softbank reveals that the deal has not been confirmed and will depend on the agreement of the tender price and percentage shareholding for Softbank.
This investment is seen by many as potentially crucial for Uber. Up until now, employees were unable to sell shares of the company and this investment will aid them in turning paper riches into cash.
It’s been a difficult year for Uber so far with legal battles involving Alphabets self-driving car division, the loss of their licence to operate in London and attacks on their company culture. The CEO Travis Kalanick was also forced to step down in June this year amid several scandals and legal wrangling with investors.
The investment made by Softbank might not only provide a welcome boost at a difficult time, it could very well be vital for Ubers future.
EY further expands it growing consultancy and advisory practice with the appointment of Chief Economist Neil Gibson. Former Professor with Ulster University, Gibson who has been economic advisor to the firm for over 10 years will provide economic analysis and insight to clients on a range of issues arising from continued change within Ireland’s economic landscape.
Prior to taking up the role at Ulster University, as an economist with Oxford Economics, Gibson developed marco, regional and sub-regional economic forecast models and most recently has worked with clients across the Island of Ireland on scenario planning for current and future implications of Brexit.
This appointment follows a number of strategic appointments the firm has made recently including, Shane Mac Sweeney as Partner and Head of Government & Infrastructure, along with a number of Senior Directors including Ferga Kane, Anthony Rourke and Conor Gunn who will work alongside him in providing solutions for Government and private sector clients in collaboration with EY’s existing government and infrastructure experts.
Mike McKerr, Country Managing Partner, EY Ireland: “EY Ireland welcomes the appointment of Neil Gibson as Chief Economist to the firm, having served as economic advisor to EY for the past ten years. Ireland in particular is at a critical economic cross-roads with Brexit, wider geopolitical and technological disruption. We believe that it’s essential we work in collaboration with business and Government to ensure that the UK’s exit from the EU has limited impact on the free movement of labour and trade, not just between Northern Ireland and the Republic of Ireland, but also with the mainland UK. Neil will bring unique perspectives to both the public and private sectors and I would personally like to welcome him to EY Ireland.
Neil Gibson, Chief Economist with EY Ireland: “I’m delighted to be joining the EY team to take up this new role at a time of great change in the economy. I have worked with EY over the last decade and I look forward to working with our clients, helping them to continue to succeed during what is set to be a period of unprecedented uncertainty. Tapping into the global EY economic team and working alongside our local EY teams, I am looking forward to enhancing our economic services in Ireland.”
Trish Devine, a managing director in Corporate Banking, help clients realize their objectives by leveraging different parts of the firm.
Corporate hiring plans for 2017 point to robust employment opportunities for graduates of MBA and business master's programs, according to a new employer survey report from the Graduate Management Admission Council (GMAC). Globally, 86% of companies plan to hire recent MBA graduates this year, up from 79% that hired them in 2016. Demand for these MBA graduates is strongest in the United States and Asia-Pacific, where 9 in 10 companies plan to hire these candidates.
"Despite the political uncertainty about the status of immigration and work visas in the United States and other parts of the world, companies are keen to hire graduates from this year's MBA and business master's programs, including international candidates," said Sangeet Chowfla, GMAC president and CEO. "This signifies the value these programs create for students and the vital role their skillsets bring employers."
At the time GMAC conducted the Corporate Recruiters Survey in early 2017, respondents in Asia-Pacific, Europe, Latin America and the United States declared their companies are staying the course with plans to hire international graduate business candidates. Overall, 59% of the survey respondents plan to hire or are willing to hire MBA and business master's graduates requiring legal documentation - a gain of seven%age points from 2016.
Most US companies (55%) either plan to hire (28%) or are open to hiring (27%) an international candidate in 2017 - up from 49% that had such plans last year. The technology industry in the U.S. is the most likely to hire international business graduates this year. Half of U.S. tech firms (50%) plan to hire such candidates in 2017 - up from 27% that planned to hire them last year.
GMAC conducted the 16th annual Corporate Recruiters Survey in February and March 2017 together with survey partners EFMD and MBA Career Services & Employer Alliance (MBA CSEA), in association with 97 participating graduate business schools. Survey findings are based on responses from 959 employers representing more than 628 companies in 51 countries worldwide. Two additional organizations, CEMS and RelishMBA, assisted with recruitment of survey participants.
Additional Key Findings
As the outlook for MBA hiring continues to look bright, so do projected hiring trends for 2017 business master's graduates, especially those with Master in Management and Master of Accounting degrees.
The largest increase in hiring demand compared with 2016 is seen in the share of companies that plan to hire Master in Management graduates; globally, 59% plan to hire recent Master in Management graduates, up nine%age points from last year.
Notably, 70% of manufacturing companies plan to hire Master in Management graduates in 2017, up from 50% of companies that hired them in 2016.
Data analytics expertise continues to be in high demand. Sixty-nine% of employers plan to place recent graduate business school hires into data analytics roles in 2017, just trailing marketing, business development, and finance roles - each with 71%.
For the first time, this year's survey report breaks out the responses specifically among start-up companies, revealing a promising 2017 hiring outlook for business school graduates. Three in 4 start-ups plan to hire recent MBA graduates in 2017, up from the 52% that hired them in 2016. More start-ups also plan to make 2017 hires from graduates of Master in Management (37%), Master of Accounting (23%), and Master of Finance (25%) programs.
Globally, more than half of survey respondents (52%) report that MBA base salaries will increase at (34%) or above (18%) the rate of inflation in 2017. Latin America (74% of respondents) and Asia-Pacific (59%) have the greatest share of companies that plan to increase MBA salaries either at or above the rate of inflation this year.
A majority of European and U.S. companies (57% and 51%, respectively) will maintain 2016 salary rates for new MBA hires in 2017. The projected median base starting salary for recent MBA graduates in the U.S. in 2017 is US$110,000, up from a median of US$105,000 in 2016. This represents an 83% premium over recent bachelor's-degree holders in the U.S., who can expect to receive a median starting salary of US$60,000 in 2017.
"Once again, this year's report brings to light the continued value of the MBA degree to the marketplace," said Megan Hendricks, executive director of MBA CSEA. "The increased interest in specialty master's talent provides further indication of the relevance of these programs at our member
Adaptive Insights recently released its global CFO Indicator report, which explores the pace of finance, its impact on agility, and what CFOs need to do to shorten their organisations’ time to decisions. Alarmingly, 77% of CFOs admit that major business decisions have been delayed due to stakeholders not having timely access to data and report significant delays with respect to tasks like reporting and ad hoc analysis.
“Corporate agility requires that organisations plan for multiple outcomes, particularly as economic conditions become increasingly uncertain, turbulent, and competitive,” said Robert. S. Hull, founder and chairman at Adaptive Insights. “CFOs can improve their organisations’ agility by accelerating the speed of scenario planning and analysis. By giving key stakeholders more immediate access to data, finance can dramatically improve decision-making—the key to maximising corporate performance.”
The report warns CFOs that the current pace of finance could threaten corporate agility and provides views on the practices that should be adopted to create a more forward-looking, agile environment.
Key findings in the report show that:
The need for speed…in reporting and ad hoc analysis
This quarter’s report reveals that key decisions around such things as capital expenditures, resource allocations, and investments have been delayed because stakeholders don’t have timely access to data. With shrinking product and innovation cycles—not to mention ever-increasing global competition—these delays can mean the difference between the success or failure of the business.
CFOs (47%) report that it is taking 11+ days to get reports into the hands of stakeholders, yet they (56%) would like it to take no more than five days. Ad hoc analysis is also taking longer than desired, as CFOs (60%) say this task takes up to 5 days, yet they would like it to take no more than a day. Reporting and ad hoc analysis represent two key areas that can be improved to enable better agility.
The impact of technology on agility
The desire to move toward a more analytics-driven organisation appears to be impacting CFOs’ decisions when it comes to implementing technology. Dashboards and analytics top the list of future purchases, with 45% of CFOs saying they will invest in this type of solution by 2020, followed closely by budgeting and forecasting tools (40%).
Discouragingly, it appears that most organisations continue to depend on point solutions that do not provide the integrated access to data that SaaS solutions can provide. CFOs report that, on average, only 33% of their organisations’ infrastructure is SaaS today with a desire to get to 60% by 2020.
(Source: Adaptive Insights)
The financial services sector tops the table in deals between large organisations and UK SMEs. Since April 2016, there have been 452 deals, known to have exceeded £6.2bn. This accounts for 41% of the national total volume.
Economic data, released today by national law firm Bond Dickinson, explores mergers and acquisitions, joint ventures and minority stake purchases in UK SMEs from both domestic and international corporates.
Over the last four years, there were 1,864 financial services deals, known to have totalled in excess of £31bn.
Seen against the 7.2% that financial services and insurance contributed to UK GVA in 2016, the intense focus on collaboration with SMEs mirrors the sector's drive to exploit the opportunities presented by fintech.
Across all sectors, between 2013/14 and 2016/17, large organisations are known to have invested over £102bn in 5,447 deals with UK SMEs. This exceeds the £62bn corporates invested in UK research and development between 2013 and 2016*, and represents more than a seventh of the £683bn total UK business investment.
Based on analysis of four tax years of deal data, the findings are detailed in Close Encounters: The power of collaborative innovation.
Ben Butler, Partner at Bond Dickinson, comments: “Partnering with startups has become a key element to the digital transformation strategies which are now of vital importance to the financial services sector’s prospects. Large firms’ ability to innovate can be held back by dependence on legacy systems, while dynamic young SMEs have the advantage of developing from scratch. These partnerships combine the best of agility and scale to deliver improvements for customers and the sector as a whole.
“Despite complex and changing regulation, such as the Open Banking Initiative and PSD2, financial services has faced disruption head-on, embracing the advantages of collaborative innovation and startup incubation. The challenge now is to keep this up and not be distracted by political uncertainty.”
Bond Dickinson’s study goes on to reveal that the total number of financial services collaborative deals dropped by 22% in 2016/17.
Deal volume rose from 406 during the 2013/14 tax year, to 426 in 2014/15, to a peak of 580 in 2015/16, before falling to 452 in 2016/17.
However, the financial services sector is slightly more robust than others, as the average dip across all sectors, including energy, insurance, manufacturing and chemicals, real estate, retail and transport was 28%. This is striking considering the possibility of a disproportionate impact of Brexit on financial services.
A move away from M&A
In the majority of sectors, M&A remains the most popular collaboration vehicle between SMEs and large organisations. However, in financial services, minority stake investments made up three quarters (75%) of deals since 2013/14, three times as many as M&As (25%).
Of the 2,409 minority stake purchases conducted between large organisations and UK SMEs between 2013/4 and 2016/7, almost 60% (1,390) involved financial services firms. £14.3bn was invested in these minority stake deals. This mirrors strategic investments in accelerator funds, startup events and incubators, amongst banks in particular, which together create an ecosystem for collaborative innovation.
Ben Butler adds: “The popularity of minority stake purchases, rather than full acquisitions, shows financial services has found an alternative to the traditional model of buying up startups and attempting to integrate them. This is a new way of harnessing the value of long-term relationships with dynamic startups. A wariness of investing in tech entrepreneurs with fast exit plans could well see this turning into a wider trend in other industries.”
(Source: Bond Dickinson)
Written by Katina Hristova
Another option for your business travel or holiday, also located in the dazzling Canal District, is the superb Seven One Seven Hotel. Housed in a stunning 17th-century building which overlooks the Prinsengracht canal, the boutique hotel could easily be mistaken for a private house. Despite its central location, once you walk through the dark-green door of Seven One Seven, you will feel worlds away from the hustle and the bustle of the bars, restaurants and coffee shops nearby – something that reserved romantics will definitely appreciate.
Beyond the entrance is the salon – a gorgeously assembled, high-ceilinged space, adjacent to which is an elegant lounge area, decorated with sumptuous furnishings, designer pieces and original art. The nine suites, which reflect the lounge’s interior design style, combine elegant, antique décor with modern and homely feel. They vary from spacious to very spacious, not only according to central Amsterdam standards. The two executive suites (called Schubert and Picasso) have high ceilings and boast prime views of the Prinsengracht canal. All rooms feature the latest in-room advanced technology, including audio system. Each suite is a room of enchantment, crafted from a range of furnishings, decorations and works of art that have been thoughtfully assembled to create a truly magnificent atmosphere.
The delicious breakfast that the hotel offers in a cosy and tastefully-decorated restaurant area, is served a la carte and includes eggs, cold meats, a selection of cheeses, pastries, fresh fruits and juices. The friendly and knowledgeable staff offer impeccable service and tend to the needs of all guests at all times. Their discreetness adds to the low-key and domestic aura of the Seven One Seven Hotel.
Breathe in the Dutch air, absorb everything that Amsterdam has to offer and make yourself at home in a stately Amsterdam canal house. The laid-back, guesthouse feel of the splendid Seven One Seven hotel will undoubtedly make your stay in the culture-filled and spirited Dutch capital truly unforgettable!
For more information, please call +31 (20) 4270717 or email firstname.lastname@example.org
ZEDRA is an independent global specialist in Trust, Corporate and Fund services.
Based in offices across eleven key jurisdictions, the company’s 370–strong team of industry experts is dedicated to creating and delivering bespoke solutions for a diverse client base including high-net-worth individuals and their families, international corporations, institutional investors and entrepreneurs.
Norson Harris is a Director at ZEDRA Trust Company in Jersey. In addition to his duties as a Director of the Company, Norson is responsible for looking after the interest of many of the families the firm has as clients, principally in Asia. We had the privilege of speaking to Norson, who told us in more detail about his role and achievements, the hottest trends within Jersey’s fiduciary services sector, ZEDRA’s approach to its clients and what makes the company a game changer.
What are the current hottest topics discussed in the fiduciary services sector?
The industry is looking in detail at the implications of the Common Reporting Standards (CRS) and the potential consequences of the cross-border reporting this will involve. This includes the obvious consequences such as tax transparency, but for some clients, this also includes perceived and apparent threats to security and confidentiality.
In the immediate future, the industry is also digesting the changes to the UK Resident Non- Domiciled Regime and how this impacts on residence and significantly, property ownership in the UK.
What are the most commonly sought after fiduciary services in Jersey?
Traditionally, this has been companies and trusts, but increasingly we are seeing the use of more complex structures such as Private Trust Companies. There is increasing interest in Jersey Foundations and amongst some of the largest families we represent at ZEDRA, we are looking at the use of close ended investment funds to hold their diverse assets.
A lot of focus is given to the existence of private trusts in the Islands, but often overlooked is the significance of the Island to the UK economy and the corporate services provided by companies such as ZEDRA. Jersey Finance, the Island’s promotional agency reports, “Jersey is a ‘jurisdiction of choice’ for listing holding companies on the Main Market of the London Stock Exchange. There are a number of ‘high profile’ FTSE listed Jersey companies and Jersey also has the greatest number of FTSE 100 companies registered outside the UK”. Jersey supports an estimated 250,000 British jobs and is a conduit for almost £500 billion of foreign investment into the country, according to a report into the jurisdiction’s value to the United Kingdom.
What are the primary risks and sensitive considerations you raise with your clients?
Confidentiality remains a sensitive issue. We have all experienced the ever greater need to disclose personal information to comply with International Regulatory Standards, but for some families this is a highly charged subject. It is recognised that there are needs to monitor and identify the financial relationships and funds held in the Island and within a jurisdiction such as Jersey with a politically neutral establishment and independent judiciary; this does not present a concern. However, where this information is then shared under international protocols, such as CRS, there are genuine concerns for some families as to what purpose this shared information is to be used. This is not a taxation concern as all companies in the fiduciary and wider finance industry recognise their responsibilities in this regard. What is of more concern is whether the information will be used to exploit the family in some way, or raise personal security issues, or be used for political advantage?
With over 25 years of experience in the international financial services industry, you are recognised as a fiduciary expert - how are you developing new strategies and ways to help clients?
It is funny, the longer I am in the industry, I realise that the same strategies I used at the very outset of my career remain the same. Personal, discrete, attentive service remains the driver to everything we do. The structuring may change over time, but more often than not, we are asked the same things; how to protect the wealth and interests of the families we represent. When I started my career, we were more concerned with family protection as the tax code was far less defined and my average client would invariably have been a ‘Landed Family’ in the UK or an industrialist, as they would be more likely known then. The industry over time became more focussed on the tax affairs of clients and in line with the political temperature and regulatory landscape in recent years, the fiduciary sector has again refocussed and there has been a return to more traditional structuring and less emphasis on tax structuring. Whilst my career has gone full circle and I still work with entrepreneurs, the Landed Families have been replaced by some of the world’s wealthiest international families.
You joined ZEDRA a year ago - what were your goals in driving change within the company?
I was actually approached the previous year by Barclays Private Bank & Trust Company to help with the positioning of the sale of the Barclays Offshore Fiduciary Group, which ultimately became ZEDRA. My goal then, which continues today, is to ensure the families we look after are supported in the transition from being owned by a global banking giant to an independent fiduciary group, whilst at the same time launching the ZEDRA identity.
This also required providing support and direction to the staff of the Jersey Company and the wider Group as we began not only the rebranding and launch of ZEDRA but helping to define and develop the new culture of the Company.
How would you evaluate your role and its impact over the last year or so?
I suspect my role individually has been quite minor, but I have been supported by an incredible team of industry practitioners and some very creative people. At the beginning of 2016, no one knew the name ZEDRA, but over the last 12 months, the global recognition of the brand and what it represents, has been quite remarkable. We are seeing an enormous amount of interest in the work we do and we are at the moment receiving a lot of attention from industry advisors looking to build relationships with ZERDA.
Regrettably, my global impact has been less complimentary as I believe I have travelled some 250,000 miles in the last two years.
What further goals are you currently working towards with the company and do you have a particular vision for the future of its services?
ZEDRA continues to expand both in our jurisdictional reach, but also in the number of staff globally that we now employ. This allows the Group to develop its brand identity but also its corporate culture, all of which is very exciting. ZEDRA’s credo as a group is ‘Do More. Achieve More.’ and our goal is to provide those services that our families and clients need from us to support their own ambitions. As a consequence, we have deliberately told the teams at ZEDRA that we are happy to explore and consider all sensible prospects and business enquiries, thus creating an intuitive and flexible environment for clients from all around the world and in all sectors.
What challenges would you say you and the firm encounter on a regular basis? How are these resolved?
As with any launch, especially where a number of companies are brought together, trying to develop a corporate culture is critically important. It is essential to communicate with all employees as to what is happening and what the future looks like from a corporate perspective. In all such scenarios, there are early adopters and other members of the company who will be a little more reluctant to embrace the change. This is more so when one considers that for some of the staff at ZEDRA, their entire employment history may have been with Barclays previously.
Staff recruitment is always difficult, especially in the offshore world, but from discussions with a number of the recruitment agencies we employ, we are seeing enormous interest from people wishing to work for ZEDRA. We are doing something exciting and we strive to be the ‘employer of choice’.
What would you say are the company’s top three priorities towards its clients?
Understanding our client’s ambitions and concerns, developing close personal relationships with them and acting professionally and with integrity in everything we do.
What has been your biggest professional reward so far? And how will this help you achieve further for your clients in future?
I think being recognised by my peer group in the industry has been remarkably rewarding. I have been very fortunate to have received a number of awards over the years, but I recognise that these have been as a result of close collaboration with my colleagues and staff without whom it would have been a lot less interesting and rewarding. An exciting part of my role is to ‘pass the baton’ to the next generation of practitioners who will continue to support me in my relationship with my clients, but who in the longer term (I am not quite done yet) will go on to lead their own relationships.
What lies on the horizon for the firm in 2017, and what big changes do you expect in the coming year?
ZEDRA will continue to consolidate our existing business within the Group and grow the offices to support our clients’ needs. We will also look to further jurisdictions to add to our global offering to ensure we meet those very exacting standards we set for ourselves and to meet the expectations of our clients.
Is there anything else you would like to add?
It may seem trite, but it really is a team effort to build and grow a diverse financial services Group like ZEDRA. We have been enormously fortunate to have the support of the Sarikhani and Nielsen families as our new owners. The massive contribution from all of the staff across the Group in this first year has been key in the success of ZEDRA but we must also recognise the patience and loyalty of our clients, without whom, it would not have been possible.