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Money latest: 'Stealth' raid on Britons' inheritance revealed; urgent Aldi recall amid police probe; petrol price spikes

Inheritance tax receipts surged to a record high last year due to the government freezing the threshold at which you start to pay. Read this plus all the latest consumer and personal finance news below - and listen to the latest Ian King Business Podcast as you scroll.

Tuesday 23 April 2024 20:41, UK

• Inflation falling doesn't mean we should cut interest rates, Bank of England economist says
• More Britons paying inheritance tax after chancellor freezes threshold - so how can you beat it?
• Aldi recalls product amid police investigation
• Petrol prices hit 150p a litre for first time since November

Essential reads

• 'More important than a will': What are lasting power of attorneys and how much do they cost?
• Ian King analysis : FTSE highs - why is it happening and what does it mean for UK economy?
• Money Problem : My neighbour's trees are damaging my wall, they think they're bigger than the law - what can I do?
• Should you offer kids cash rewards for good grades? Psychologist's view
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Tesco is being monitored by the UK's supermarket regulator after it began imposing an "Amazon-style" fulfilment fee on online suppliers, according to The Times. 

The supermarket faced criticism after it imposed the fee, which is linked to processing orders, picking and shipping products, and managing returns. 

Brands and suppliers said the fee could put many of them out of business. 

Tesco argued it made the decision after its own fulfilment costs grew when it expanded its online operations.

The smallest suppliers with contracts of £250,000 or less are exempt, but bigger suppliers pay from 12p per item for branded goods and 5p for own brands.

Carpetright has been hit by a cyberattack which has prevented it from trading across its 400 UK stores for almost a week, according to a report. 

Customers have been unable to place orders in its shops since last Thursday, staff told The Times. 

A spokeswoman added that online customers were "largely unaffected" and would be able to make new orders - but the attack will still be a financial blow for the flooring chain. 

BP is rolling out a new crime logging platform and body-worn cameras to improve safety for its staff members. 

The app-based platform will allow staff to report incidents and get in touch with police, as well as helping BP to identify offenders targeting multiple sites across its business. 

The platform will also send an alert when repeat offenders or vehicles of interest are reported on the platform in the local area. 

The government has announced a UK-wide ban on wet wipes containing plastic in a bid to reduce pollution.

According to the Marine Conservation Society, 11 billion wet wipes are used in the UK each year. Of these, 90% contain plastic. 

Discarded wet wipes frequently litter Britain's beaches and eventually break down into microplastics, which contribute to water pollution and damage ecosystems.

The ban, announced yesterday, should go through parliament this summer.

Read more here ...

Rising private school fees are forcing parents to take out loans, move house or turn to taking money from relatives.

More than 71% of 2,000 people surveyed in the Saltus Wealth Index report said the rising cost of private school tuition was impacting choices regarding their children.

Mike Stimpson, a partner at Saltus, said fees had increased by 6% from 2022-23 and were likely to increase another 5% this September. 

Out of the respondents, 21% said they would have to move their children out of private school.

Private school costs average around £24,000 a year, according to The Good Schools Guide.

Rising cigarette prices are prompting more people to quit smoking.

While health concerns still remained the top reason for quitting in a survey of nearly 6,000 people, a quarter of respondents said it was down to the cost of cigarettes - up from a fifth before the pandemic. 

The average price of a packet of 20 cigarettes is more than £14. 

Highlighting the savings that could be made by quitting smoking could help more people to stop, the University College London study said. 

The FTSE-100 has hit a second all-time closing high in as many days. The index of the UK's biggest 100 listed companies, having earlier hit a new intra-day high of 8,075.52 at just after 8.24am, finished the session up 20.94 points, around 0.26%, at 8044.81.

It's worth noting, though, the Footsie has been a relative laggard this year. The S&P 500, America's top stock index, is up 6.91% so far in 2024, Japan's Nikkei 225 is up 12.81% and Germany's DAX 40 is up by 8.30%. 

The Footsie, by contrast, is up by a mere 4.05% even after the rally of recent sessions. So it can hardly be said to be doing well compared with international peers. On top of those already mentioned, the MIB in Italy is up by 13.24% this year and the CAC 40 in France by 7.46%, for example.

Nonetheless, the Footsie hitting a new record close two days running is notable.

There is no shortage of reasons why. 

The most obvious is the recent weakness in sterling. The pound hit a five-month low against an international basket of currencies on Monday following comments from Sir Dave Ramsden, a deputy governor of the Bank of England, on Friday afternoon in which he pointed to the growing likelihood of interest rate cuts in the near future. 

That has weakened the pound against the US dollar in particular. 

Since three-quarters of earnings of FTSE-100 companies are denominated in other currencies, chiefly the US dollar, a fall in the pound against those currencies makes the future earnings generated by Footsie companies - whose shares are denominated in sterling - cheaper to buy in those currencies.

That was certainly behind the big rally seen on Monday -although today sterling rallied on comments from Huw Pill, the Bank's chief economist, which suggests there is more going on. That something is the relative cheapness of the Footsie in comparison with its peers. 

The Footsie currently trades on a price/earnings (P/E) ratio of just 13.22 times - in other words, £1 invested in the index today would be repaid 13.22 years from now. 

That is cheap when set against the DAX in Germany, which trades on a P/E of 14.87 times and the CAC in France, which trades on a P/E of 15.91 times or the SMI in Switzerland, which is on 14.52 times. 

The main US indices, meanwhile, cavort along on P/E ratios of more than 20 times. Only Spain's leading stock index, the IBEX, looks cheaper than the Footsie by comparison.

The conclusion that should emphatically not be drawn is that the Footsie's recent rally is anything to do with the UK's economic outlook, even though the latter is visibly improving. 

The index is chock-full of companies that have little or nothing to do with the UK - such as Fresnillo, a Mexican gold and silver miner; Antofagasta, a Chilean copper and gold miner; and Ashtead Group, a plant and tool hire company which derives £90 in every £100 it earns from the US. 

Even companies thought of as British, such as BP, Rolls-Royce, BAE Systems, Shell and Diageo, the world's biggest scotch whisky and tequila producer, derive the vast majority of their earnings outside the UK. In fact, of the 20 biggest companies in the Footsie, only one - the Lloyds Banking Group - can be said to make most of its income in the UK.

For a better gauge of how corporate Britain is doing, investors are better off looking at the FTSE 250, the next biggest 250 listed companies on the London Stock Exchange and home to household names such as Bellway, Games Workshop and ITV.

Some of these also derive a fair chunk of earnings from outside the UK, such as the cruise operator Carnival, the ingredients producer Tate & Lyle and the catalytic converters group Johnson Matthey. 

But it is also replete with companies that make most or all of their earnings in the UK, such as the property trio British Land, LondonMetric Property and Derwent London, the housebuilder Bellway and everyone's favourite sausage roll emporium Greggs.

In short, the FTSE 250 is a much better guide to sentiment towards UK companies than the FTSE-100. The bad news is that it is only up by a paltry 0.6% this year so far.

Labour has added an amendment to the government's Renters (Reform) Bill that would prevent landlords from selling a property for two years after a tenancy has begun. 

Under the rule, landlords would have to wait two years from the tenancy start date before initiating repossession proceedings. 

The bill aims to reform the private rental sector, and also includes plans to scrap "no fault" evictions, make it illegal for landlords to refuse to rent out to those on benefits or with children, and create a national landlord register. 

It is being debated tomorrow and is in the report stage, meaning MPs can consider further amendments. 

Any amendments will need to be voted through.

Other significant amendments include prevemting tenants from giving notice to quit until they have been in a property for four months. 

As tenants have to give two months' notice, this effectively means they will need to stay in a property for six months. 

Tory MP Natalie Elphicke has also added an amendment requiring landlords to pay renters and unspecified relocation fee if if they asked them to leave a property within the first two years of a tenancy.

Recent falls in inflation may have spurred talk of interest rate cuts, but the Bank of England's deputy governor has said this is not necessarily enough reason to slash rates. 

Speaking at the University of Chicago, Huw Pill said it would be better to cut rates too late rather than too early. 

He said little had changed with the inflation and interest rate situation since late March, and that there were "greater risks" associated with going too early. 

Despite optimism among some, Mr Pill said there is still a "reasonable way to go" before inflation has stabilised to the level needed for the UK to meet its 2% inflation target in a sustainable way. 

"This assessment further supports my relatively cautious approach to starting to reduce Bank rate," he said. 

Mr Pill had voted to keep the Bank rate unchanged at 5.25% in the most recent meetings of the Bank's Monetary Policy Committee in March. 

Inflation currently stands at 3.2% - the lowest rate since September 2021. 

This is still above the Bank's target of 2%. 

The next Bank rate decision is next week - but markets don't expect a cut then. June is seen as more likely - though Mr Pill's comments cast some doubt on that.

Petrol prices are exceeding 150p per litre for the first time since last November, according to new data.

Figures from the website Fuel Prices Online shows typical pump prices reached 150.1p per litre on Monday.

The average price of a litre of diesel is also at the highest level since November 2023, at 158.3p.

Experts say rising fuel prices in recent weeks can be attributed to an increase in the cost of oil and a weakening of the pound versus the US dollar.

AA fuel price spokesman Luke Bosdet said while inflation was heading downwards, petrol's rebound to 150p a litre left a "big boulder in the road".

He said: "Five days of falling wholesale costs, with the value of oil coming off the boil, offers hope that pump prices may not get much worse in the short-term.

"However, road fuel priced above 150p a litre grabs the attention of drivers and will lead some to re-tighten their belts on other spending."

The annual 100 fastest growing UK businesses list has been published, with the country's largest electric vehicle fast charging network in top spot.

Environmentally conscious companies dominate the ORESA Growth Index 2024 - with three of the top 10 companies participating in the clean and renewable energy market.

There was also success for the retail sector, with 24 businesses in the list, while the construction and logistics sectors have also seen signs of recovery since the COVID-19 pandemic. 

Topping this year's list is Basingstoke-based green energy business InstaVolt, which had an annual growth rate of 362.55%.

The company is the largest owner-operator of rapid public chargers in the UK, with 1,500 charging points.

In 2022-23, the company's third financial year, its revenues hit £18.6m.

Here's the top 10...

Regional success

While London and the South East dominate the list with 59 companies, Northern Ireland has four - up from zero in the past two years. 

Companies from Yorkshire and Humber and the North East have increased from six to 10 and from zero to one respectively, while the East Midlands has gone down to six from nine in 2023. 

Inheritance tax receipts surged to a record high last year due to the government freezing the threshold at which you start to pay.

Official figures show the government received £7.5bn in inheritance tax (IHT) receipts in the financial year to the end of March - an increase of £400m on the same period the previous year. 

(More widely, total tax receipts were £827.7bn - £39.1bn higher than the same period last year - due in part to inflation and other tax threshold freezes.)

Inheritance tax is a tax on the estate of someone who has died - including all property, possessions and money - and is only charged above the tax-free threshold of £325,000. 

This threshold has been frozen by the chancellor until 2028.

So, with inflation boosting the value of people's estates, more people are being dragged above the threshold.

The standard inheritance tax rate is 40%. 

Jonathan Halberda, specialist financial adviser at Wesleyan Financial Services, says more families "can expect to be caught in its net".

So what can be done to ensure families can keep their wealth? 

Use the inheritance tax spouse exemption

Mr Halberda says if you leave your entire estate to your spouse or civil partner, there will be no inheritance tax to pay - even if its value exceeds £325,000. 

Make a will

Doing this can mean you can distribute assets to take advantage of tax-free allowances. 

"Assets in trusts are no longer in your name and therefore not considered when valuing your estate for inheritance tax," Mr Halberda says. 

Gift giving 

Gifting money or assets to loved ones before you die can avoid inheritance tax, but there are limits on how much you can give away and who to. 

Gifts to charity 

Leaving gifts to registered UK charities in your will is exempt from inheritance tax.

By Daniel Binns, business reporter

The FTSE 100 has hit another all-time high this morning following its record performance yesterday.

The index, of the 100 most valuable companies on the London Stock Exchange, soared to 8,071 points shortly after the opening. It marks a new "intraday" (during the day) record.

Later in the morning, the FTSE 100 eased back to 8,060 points, but was still up nearly 0.5% on yesterday. The score is based on a calculation of the total value of the shares on the index.

It comes after the index reported a record-high closing figure of 8,023 yesterday following a fall in the value of the pound. A lower pound makes it cheaper for foreign investors to invest in FTSE companies.

One of the reasons the pound is falling against the dollar is interest rates are expected to stay higher for longer in the US - meaning investors will get better returns on their US investments.

The strong performance this morning raises the prospect we could see another record close at the end of today's trading.

Danni Hewson, from investment platform AJ Bell, said the figures were "psychologically important for investors and for London markets as a whole" as the capital has been lagging behind its rivals, particularly the US, in recent years.

Among the firms doing very well this morning is JD Sports. The retailer's shares are up more than 7% in early trading following reports that it is set to buy US rival Hibbett for $1.08bn (£0.87bn).

On the currency markets, £1 will buy you $1.23 US or €1.15, similar to yesterday's five-month lows for the pound.

The price of a barrel of Brent crude oil is up almost 1% at nearly $88 (£71) this morning.

Aldi has recalled one of its products and a police investigation has been launched over fears it "may have been tampered with".

The supermarket has pulled its Village Bakery 8 Tortilla Wraps White, citing safety fears over the "possible presence of metal". 

The recall affects items with best before dates up to and including 29 April 2024, and with a pack size of 8x62g.

Anyone who has bought the item is being urged to bring it back to their nearest Aldi. 

Notices have been posted at the stores telling customers not to eat the wraps. 

Aldi said its products go through "rigorous safety and quality checks" and the item was being recalled as a "precautionary measure".

"As there is an active police investigation we are not able to comment any further on this matter at this time," it said. 

The Food Standards Agency (FSA) also said Signature Flatbreads UK, which makes the wraps, is "working with the relevant food and police agencies to investigate the cause of the contamination".

No other items from the company are affected, it said.

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Coalfield communities held back by lack of quality jobs – new research

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Former coalfield communities still face a shortage of quality jobs, according to a new report by Sheffield Hallam University experts.

Press contact: Jo Beattie | [email protected]

The State of the Coalfields 2024 is the third report commissioned by the Coalfields Regeneration Trust (CRT) from the Centre for Regional Economic and Social Research at Sheffield Hallam University, following studies in 2014 and 2019.

The new report, released 40 years after the Miners’ Strike began in 1984, found that although there has been substantial job growth in the former coalfields, the rate of growth has been far slower than in the main regional cities.

The most recent figures show that in the former coalfields there are only 57 employee jobs for every 100 residents of working age, compared to a national average of 73 jobs per 100, and 88 per 100 in the main regional cities.

The shortage of local jobs means that many coalfield residents are now having to commute to neighbouring towns and cities.

The quality of jobs in the former coalfields is also below the standard in other areas. More than half of employed residents work in manual jobs. Average hourly earnings are 6-7 per cent below the national average.

In some parts of the country, warehousing has become a dominant employer and now employs 175,000 people in the former coalfields – almost as many as the coal industry itself just prior to the 1984/5 strike.

Overall, the report argues, these changes mean that many of the young and better qualified are having to move away from the communities in which they grew up to seek better opportunities elsewhere.

This leaves a population in the former coalfields which is generally older and in poorer health, with seven per cent of all residents saying their health is ‘bad or very bad’ and more than 10 per cent claiming disability benefits. In total almost 600,000 coalfield residents – one in six of all adults of working age – claim out-of-work benefits of one kind or another.

Co-author of the report, Professor Steve Fothergill from the Centre for Regional Economic and Social Research, said: “Britain’s coalfields have moved on since the job losses of the 1980s and 90s. There has been substantial progress in new job creation and the former coalfields have emerged with new roles in local and regional economies. But the full benefits of job growth have not always filtered through to local residents, leaving behind many people and communities.”

The report finds that if brought together the former coalfields would likely be the most deprived region in the UK.

The Coalfields Regeneration Trust is calling on governments across the UK and leaders in coalfield communities to do more to support economic growth in former coalfield communities to enable these areas to reach their full potential.

Linda McAvan, Chair of the Coalfields Regeneration Trust, said: “ We are seeing positive steps towards improving the economy in the former coalfields – however it is concerning that our progress is slower than in other parts of the country. “We know that the issues affecting coalfield communities around low quality jobs, lower wages and poor health can be tackled and the Coalfields Regeneration Trust is playing its part in addressing these issues.

“We are keen to work with political decision makers at all levels so that we can enable our communities to reach their full potential.”

Read the State of the Coalfields 2024 report .

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Salman Rushdie warns young people against forgetting value of free speech

Author also discusses prospect of second Trump presidency and writing about his stabbing in launch event for his book Knife

Salman Rushdie has warned young people against forgetting the value of free speech and discussed the “very big and negative” impact of a second Trump presidency in a rare public appearance since his stabbing.

The Indian-born British-American author of books including the Satanic Verses and Midnight’s Children also discussed the attack in 2022 that left him blind in one eye during a Q&A at an English PEN event at the Southbank Centre .

“I have a very old-fashioned view about [free speech],” said Rushdie, appearing by video from his home in New York to mark the launch of his new memoir, Knife: Meditations After an Attempted Murder . “The defence of free expression begins at the point at which somebody says something you don’t like.

“It’s a very simple thing, but it’s being forgotten. That is what’s enshrined in the first amendment … In the US, you feel there’s a younger generation that’s kind of forgetting the value of that. Often, for reasons they would believe to be virtuous, they’re prepared to suppress kinds of speech with which they don’t sympathise. It’s a slippery slope. And look out, because the person slipping down that slope could be you.”

Rushdie said academia in America was “in serious trouble … because of colossal political divisions. And everybody is so angry that it seems very difficult to find a common place.”

The Booker-prize-winning author, whose books have been translated into more than 40 languages, discussed the prospect of a second Trump presidency with the author and critic Erica Wagner and encouraged young people in the US to “not make the mistake of not voting”.

He said: “The impact would be very big and negative. He’d be worse a second time around, because he’d be unleashed and vengeful. All he talks about is revenge. And that’s a bad policy platform, that you want to be president to deal revenge against your enemies.

“In New York, people had got the point of Donald Trump long before he ever tried to run for office. Everybody knew that he was a buffoon and a liar. And unfortunately, America had to find out the hard way. I just hope they don’t fall for it again.”

Rushdie was about to give a talk at the Chautauqua Institution in New York state on 12 August 2022 when a man rushed on stage and stabbed him about 10 times. “I saw the man in black running toward me down the right-hand side of the seating area,” he recalls in his new book . The writer was hospitalised for six weeks.

On Sunday, he said he hadn’t been able to think about writing for six months, but then it struck him that it would be “ludicrous” to write about anything else.

He described the difficulty of penning the first chapter, “in which I have to describe in some detail the exact nature of the attack. It was very hard to do.”

Knife, the writer said, was the “only book I’ve ever written with the help of a therapist. It gave me back control of the narrative. Instead of being a man lying on the stage with a pool of blood, I’m a man writing a book about a man live on stage with a pool of blood. That felt good.”

Rushdie also spoke about the postponement of the trial of his attacker, Hadi Matar . He said Matar’s not-guilty plea was “an absurdity” and that he would testify at any future trial. “It doesn’t bother me to be in the courtroom with him. It should bother him.”

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In Knife, Matar is not named, but referred to as “the A”. Rushdie said he was inspired by a Margaret Thatcher line about “wanting to deny the terrorists what she called the oxygen of publicity. That phrase stuck in my head. I thought, ‘This guy had his 27 seconds of fame. And now he should go back to being nobody.’

“I use this initial A because I thought there were many things he was: a would-be assassin, an assailant, an adversary … an ass.”

However, Rushdie said, “the most interesting” part of the book to write was the 30 pages of imagined dialogue between him and his attacker.

“I actually wanted to meet him and ask him some questions. Then I read about this incident where Samuel Beckett was the victim of a knife attack in Paris by a pimp. He went to the man’s trial, and at the end of it said to him: ‘Why did you do it?’ And the only thing the man said was: ‘I don’t know, I’m sorry.’ I thought: if I actually were to meet this guy, I would get some banality.”

So Rushdie decided it would “be better to try to imagine myself” into the head of a person who chose to attack a stranger despite reading “no more than two pages of something I’d written”.

‘There is in my mind an absence in his story,” he said. “This is somebody who was 24 years old. He must have known that he was going to be wrecking his life as well as mine, and yet he was willing to commit murder. He’s somebody with no previous criminal record and not on any kind of terrorism watch list. Just a kid in Fairview, New Jersey. And to go from that to murder is a very big jump.”

• Salman Rushdie
• Southbank Centre

More on this story

Knife by Salman Rushdie review – a life interrupted

‘Why didn’t I fight? Why didn’t I run?’: 10 things we learned from Salman Rushdie’s Knife

Knife by Salman Rushdie review – a story of hatred defeated by love

‘I can’t explain it’: Salman Rushdie says his survival in knife attack was a miracle

Salman Rushdie has lost sight in one eye and use of one hand, says agent

Drastic rethink of security likely in wake of Salman Rushdie attack

Salman Rushdie’s grave fears for Indian democracy published in PEN anthology

Iran denies role in Salman Rushdie attack but claims author is to blame

Salman Rushdie ‘road to recovery has begun’ but ‘will be long,’ agent says

If we don’t defend free speech, we live in tyranny: Salman Rushdie shows us that

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