The recent inheritance tax hike on London’s junior market, AIM, is projected to cost the Treasury over £1bn, according to investment bank Peel Hunt. The Government anticipated raising £92.5m from a 50% inheritance levy on AIM stocks, but Charles Hall, Peel Hunt’s head of research, highlighted that AIM shares will not benefit from the £1m allowance available to farms and family businesses. This exclusion may lead to a significant shift in investment strategies, with Hall stating: “There will be a clear incentive for IFAs to move the existing £6bn of AIM inheritance tax funds into private vehicles.” Consequently, Peel Hunt forecasts an annual withdrawal of over £600m from AIM, exacerbating the already low IPO activity and potential fund closures. The bank urges the Government to reconsider the £1m allowance and reduce the capital gains tax rate for AIM stocks to support the struggling market.

Research by PwC reveals that the 100 largest companies in Britain and their employees contributed £93.3bn in taxes during the 2023-24 financial year. This includes £31.8bn in direct taxes, marking a 10.2% increase from the previous year, while the amount collected from employees, including income tax and national insurance, rose by 1.8% to £61.5bn. Corporation tax remains the largest tax obligation among the 31 taxes these companies must pay or collect. Andy Agg, chairman of the 100 Group tax committee, stated: “The survey shows the significant contribution that large companies make to the public finances.” Nine new taxes have been introduced since 2006.

Tax advisers and lawyers indicate a significant number of non-doms, wealthy foreigners residing in the UK, are planning to leave before April 2025 due to impending changes in inheritance tax (IHT) regulations. The new rules, introduced in Chancellor Rachel Reeves’ recent Budget, will impose IHT on non-doms’ UK assets for their first ten years of residence, after which it will apply to all global holdings. Philip Munro, a partner at Withers, stated: “(The rules are) basically saying if you want to go, you have to go this tax year.” This shift is prompting many non-doms, particularly those aged sixty and above, to expedite their departure to avoid higher tax liabilities.

Some small businesses in Great Britain are set to cease sales to customers in Northern Ireland due to new EU product safety regulations, effective from 13 December. The General Product Safety Regulation (GPSR) introduces requirements for businesses selling to NI or the EU, including the appointment of a ‘responsible person’ for compliance. Samantha Paton, from Isolated Heroes, expressed concerns, stating: “There’s going to be a significant cost for small businesses.” The added bureaucracy and costs associated with compliance may render it uneconomical for many small craft businesses. A spokesperson from the department for business and trade assured that support for small and medium-sized enterprises (SMEs) is forthcoming, stating: “We will keep this under review.” The Government anticipates that GPSR will have a limited impact on the UK internal market.

The UK Government has announced a delay in the rollout of its stablecoin regulatory regime, which was anticipated this year. City minister Tulip Siddiq stated that the stablecoin regulations will now be integrated into a broader crypto regulatory framework set for next year. “Doing everything in a single phase is simpler, and it just makes more sense,” Siddiq remarked at the Tokenisation Summit on Monday. However, Mike Ringer, a financial services partner at CMS, said the delay in forging a regime for fiat-backed stablecoins was a disappointment as there was as yet no timeline given for the rollout of other cryptoassets. “This is despite the Government having said in its consultation response last year that its aim was for ‘phase 2′ secondary legislation to be laid in 2024,” he added.

London’s commercial property market is showing signs of recovery, with firms like Helical reporting a minor rebound in their property portfolio. Shaftesbury Capital also noted strong leasing demand, completing £15.9m in new leases and renewals, which is 9% ahead of June 2024. The trend towards returning to the office, driven by companies like PwC and Amazon, is expected to boost demand for commercial spaces. Landsec highlighted a shift towards “high-quality space in best locations,” while Savills reported a 1.5% increase in prime commercial rents between Q2 and Q3 2024, with a 13.1% rise over the past year.

According to a recent report from the European Commission, the UK is becoming less appealing to investors compared to Portugal, a country with a population of just 10m. Following Rachel Reeves’ Budget, Portugal is projected to grow by 2.5% next year, significantly outpacing the UK’s growth forecast. The report from Ernst & Young (EY) indicates that 84% of surveyed investors plan to expand operations in Portugal, while only 68% intend to invest in the UK. Paul Stannard, Chairman and Founder of Portugal Pathways, stated: “This is further fuelled by continued demand for the country’s popular Golden Visa residency-by-investment program.” He emphasised Portugal’s stability, tax incentives, and appealing lifestyle, making it a prime destination for investment.

Clare Lombardelli, deputy governor of the Bank of England, has expressed concerns regarding Donald Trump’s proposed trade tariffs, warning that they could hinder economic growth in the UK. In an interview with the Financial Times, she stated: “I don’t want to speculate on the specifics but we know barriers to trade are not a good thing.” Lombardelli highlighted that the uncertainty surrounding these tariffs could impact productivity and inflation, noting that the effects depend on how other countries respond. She also mentioned that domestic inflation remains a significant concern, with services inflation currently at 5%, above the Bank’s target.

The professional services sector has emerged as a key driver of growth in the UK economy, with a 0.7% increase in output during the third quarter of 2024, compared with overall growth slowing to 0.1%.