Dividend raid blunder
With their basket of tax rises, Boris Johnson and his treasury team have shown they haven’t a clue about the risks involved in running a business or, sadly, running a country.
Let’s leave aside whether the Conservative party is right to break its manifesto tax promise, and look instead at whether raising dividend taxes is the most efficient approach when Britain has just suffered one of the worst economic crises in our history.
to compensate for the iniquity that national insurance rises will hit mainly the young, Johnson has come up with a wheeze to hit those the Government thinks wealthy – so-called filthy rich shareholders.
Yet what this rise will do is hurt some of our most entrepreneurial spirits: the company directors, the self-employed and other risk-takers who create the UK’s wealth.
investors and the self-employed will now pay £600m more in tax a year as a result of this dividend hike. it will be felt most of all by directors, including the self-employed and contractors, who pay themselves via company dividends on top of salary.
Andy Chamberlain of iPSE, the trade body for the self-employed, was rather tame when he described the raid as ‘salt in a year of wounds’.
More like a year of the long knives: many small companies, the self-employed and sole traders received no support during the pandemic while changes to iR35, plus this latest hike, will make it almost impossible for the thousands of freelancers to work through limited companies.
these are not fat cats who are being hit but everyday project managers and graphic designers. Many will also be paying national insurance.
Sensibly, retail investors will be only impacted if they have significant portfolios outside of a pension or iSA, which shelter dividends from tax, and if their dividends are over the annual allowance of £2,000.
this tax is a mistake born of panic. there are much fairer – and honest – ways of raising the tax take: closing loopholes in inheritance tax and plugging the tax breaks for ‘carried interest’, to name a couple.
Let Arm go
Nvidia’S controversial £30bn bid for Britain’s chip design company, Arm, looks doomed if the smoke coming out of Brussels is anything to go by.
the US giant chip maker is due to file for regulatory clearance for the deal with the European Commission’s competition unit any day now. But officials, who have had preliminary discussions with Nvidia’s top brass, are said to be sceptical about the promises which they are making to ensure rivals have fair access to Arm’s designs.
For once it seems the UK and the EC are on the same page. Last month the Competition and Markets Authority (CMA) declared the transaction risks suffocating innovation and harming competitors.
the CMA said a merged business would harm the competitiveness of Nvidia’s rivals by restricting access to Arm’s intellectual property, which is used by firms that produce semiconductor chips and related products, in competition with Nvidia.
Quite rightly, CMA boss Andrea Coscelli wants to see a full-blooded investigation. Now it is the turn of the Commission’s Margrethe vestager to cast her eagle eye. She is no stranger to controversy and has never shied away from taking on corporate power or indeed, EU political interests.
it was vestager who ticked off Gazprom for price fixing, fined Google for giving illegal advantage to its own shopping service, forced Apple to pay €13bn for unpaid tax and probed German car makers.
hopefully she will block this bid. there is also a cute way out of the mess for Softbank – it could float Arm on the London Stock Exchange as a new company with licensees such as Apple and Qualcomm as investors.
it’s the idea of hermann hauser, one of Arm’s founders, who has waged a brilliant one-man Save Arm campaign to persuade regulators that letting Nvidia in would be a disaster for Britain and Europe.
if Arm were to be set free, hauser claims it has the potential to be the next intel. Worth a try!
Meggitt retreat
Transdigm says a lack of transparency over due diligence is why it has dropped out of the running in a rival bid for Meggitt.
A more likely explanation is that it finally sunk in that the Meggitt board was not going to back a higher offer from the US raiders. And that, if they did make an offer, the bid might be investigated.