Tax win – early allowance
Chancellor Philip Hammond announced in the Budget that planned rises in the personal tax allowance threshold and a higher rate of income tax will come into effect in April 2019 – 12 months earlier than previously expected. The personal allowance limit will increase from the current £11,850 to £12,500, while the higher-rate threshold will move from £46,350 to £50,000. This will translate into £130 extra income for basic-rate taxpayers and £860 for higher-rate taxpayers earning up to £100,000. This will remain in place until April 2021, after which the allowances will rise in line with inflation.
Airline taxes
Turbulence ahead
Airport passenger duty (APD) in the UK will increase in line with inflation from 2020. The tax currently depends on the length of the route and the cabin class the passenger is flying. In the tax year to April 2018 it raised £3.4bn, and is now expected to generate an extra £800m between 2020-21 and 2022-23. International Consolidated Airlines (IAG) criticised the move, stating that it “undermined Britain’s global competitiveness” in that APD stifles route development to new emerging markets.
BP results
Gushing profits
Oil and gas major BP (BP.) has beaten market expectations for its third-quarter results, posting $3.8bn in underlying replacement cost net profits, driven in part by higher oil prices. The company has been able to bring higher-margin barrels into production more quickly and better implement oil and gas projects. Brokerage Panmure Gordon suggested that around $400m of the unexpected profitability came from a lower tax charge of 36 per cent, while investors may have also warmed to a comment that the second tranche of the $10.5bn acquisition of miner BHP Billiton will now be funded by cash, rather than shares.
Going digital
WH Smith buys InMotion
Stationery group WH Smith (SMWH) announced the £155m acquisition of US digital accessories retailer InMotion. The target company sells mainly in US airports, and the deal is aimed at doubling WH Smith’s travel footprint. The group is busy building this side of the business as its high-street estate continues to struggle. To support the purchase, company bosses have put in place a new four-year term loan of £200m and extended its revolving credit facility – worth £140m – for another year. Completion is expected before the end of the calendar year.
US tech
Equities downturn
Shares in US technology giants Amazon (US:AMZN) and Google’s owner Alphabet (US:GOOGL) fell after both reported updates that disappointed the market. Amazon issued a cautious outlook for the fourth quarter, normally its biggest trading period of the year, with net sales growth forecasts that missed some analysts’ expectations. The online retail giant did beat expectations for third-quarter earnings, driven by its cloud computing business. Alphabet announced that its advertising business had slowed more than expected in the third quarter. Both suffered due to adverse foreign exchange.
Risers and fallers (%)
| JUST GROUP | 23.81 |
| POLYPIPE GROUP | 14.03 |
| IWG | 13.1 |
| THOMAS COOK GROUP | 12.82 |
| NANOCO GROUP | 12.75 |
| RPS GROUP | -21.5 |
| METRO BANK | -16.01 |
| WPP | -15.53 |
| HASTINGS GROUP HDG. | -15.19 |
| RESTAURANT GROUP | -13.33 |
Week to 30 October 2018
FCA insurance
Fair pricing
The Financial Conduct Authority (FCA) has launched a market study on how the £78bn general insurance market should charge customers fairly for home and motor insurance. The watchdog said that an initial review of the industry caused concern that pricing practices have the potential to be harmful to customers, especially those that are vulnerable. Some home insurers were accused of lacking clear or appropriate pricing strategies, governance and controls. The FCA also identified potential non-compliance by some firms with rules on transparency at renewal. An interim market report is expected to be published in the summer next year.
IG Group CEO
Fresh face
IG Group (IGG) has appointed June Felix as chief executive following the surprise departure of Peter Hetherington in September. Ms Felix had been the president of Verifone Europe and Russia until the point-of-sale software group’s recent sale to private equity firm Francisco Partners, and has been a non-executive director at IG group since 2015. The spread betting sector has come under pressure recently as the European Securities and Markets Authority has got tougher on online trading platforms that offer contracts for difference (CFD) products, including limits on how much leverage can be used in bets.
