BUSINESS WITH PERSONALITY MAPPING THE FUTURE A NEW WEALTH HOW LONDON COMPARES TO THE WORLD’S OTHER TECH HUBS PUZZLE See Page 19 Ryan Bourne in The Forum, Page 24 ISSUE 1,764 TUESDAY 20 NOVEMBER 2012 www.cityam.com FREE THE OSTRICH LAURA A.M. LAURA LEAN/CITY GENERATION The Mayor of London called for billionaire divorce claims to head to London Brits are burying their heads in the sand over retirement plans BY MICHAEL BOW Boris slams plans for property BRITAIN’S young savers are wildly underestimating how much they 31% need to save each month for a of 25-34 year olds tax as stamp duty hits market comfortable retirement, after a expect to retire on national survey found just one in more than BEN SOUTHWOOD with a welter of tax hikes and new 10 is putting money aside for a £30,000 a year charges. Homeowners selling proper- pension – despite having high expec- BORIS JOHNSON yesterday slammed ties for over £2m now face stamp duty tations for their final pension pots. Liberal Democrat politicians who are at seven per cent if the transaction is Just 12 per cent of Britons between calling for property tax hikes, while in their own name, rising to 15 per 25-34 years old are saving for retire- £13,200 urging Google and other companies cent for firms. ment, even though one third hope to Average income criticised for tax avoidance to do Since 77 per cent of properties retire on £30,000 a year, some £4,000 of single more to benefit the UK. worth more than £2m are located in above the average salary. pensioners today “It is absurd to be suddenly whack- the capital, London has already This is equivalent to a typical 35- ing up taxes on cash-poor people who begun to feel the impact of the tax year-old funnelling £750 a happen to inhabit expensive houses barrage. month into a pension pot, or a in London when firms like Google are And plans are in the pipeline to 25-year-old putting away £400 a 32% paying zero,” he told the audience at impose a further yearly charge of up month for retirement. of Britons are not the Confederation of British to £140,000 on companies using these The mismatch in expecta- planning or saving £600,000 Industry’s annual conference. properties, as well as hitting the busi- tions will fuel fears that mil- for their retirement your future in is the total pension into a pension. “Neither arrangement strikes me as nesses with a further capital gains lia- lions of Britain’s young people, the future... The pot required to be However, at the being fair, and so Google and co face a bility. starved of generous defined benefit stark reality is that able to retire at 65 current auto- very clear choice: they can either The Mayor used much of the rest of pension schemes and saddled with putting something on £30,000 a year enrolment saving change their tax arrangements, or do his speech to wax lyrical over the ben- high debts and soaring house prices, aside for old age has become a rate of two per cent, much more work to serve our society.” efits of doing business in London, will retire in poverty. necessity.” a typical worker will The Mayor of London’s comments calling on oligarchs to make use of The survey, conducted by YouGov, The dangers of not saving soon only be saving roughly come after devastating statistics London’s courts – sending the money found 25-34-year-olds were the thrifti- enough are apparent after figures £44 a month – hundreds of pounds released yesterday showed the effect trickling down through the city. est generation in the UK, with 18 per show a 35-year-old would have to save short of what they want. that higher taxes have already had on “I have no shame in saying to the saving money from their disposable twice as much as a 25-year-old to be National Association of Pension London’s property market. injured spouses of the world’s billion- income, but for more near-term aims able to retire with a £600,000 pension Funds chief executive Joanne Segars Across Greater London, sales of aires: if you want to take him to the such as houses, holidays and cars pot, enough to buy a £30,000 a year said: “Young people have a lot on their properties worth between £2m and cleaners, take him to the cleaners in instead of retirement. pension. plates and face great financial pres- £5m collapsed 53 per cent in the year London,” he said. “Because London Tony Stenning, UK head of retail at The government is currently sures like student debt or saving for leading to the third quarter this year, cleaners will be grateful for your busi- the world’s biggest fund manager attempting to solve the savings chal- their first home, but they should still London Central Portfolio said yester- ness.” BlackRock, which commissioned the lenge by introducing a law making it think about a pension. An early start day. In this year’s Budget, the govern- ALLISTER HEATH: Page 2 survey, said: “You really can’t build compulsory for workers to be enrolled can make a big difference.” ment slapped expensive properties MORE: Page 16 Certified Distribution FTSE 100 5,737.66 +132.07 DOW 12,795.96 +207.65 NASDAQ 2,916.07 +62.94 £/$ 1.59 unc £/€ M 1.24 -0.01 €/$ 1.28 +0.01 01/10/12 til 28/10/12 is 129,297 Meet London Business School Speak informally with a London Business School representative about our portfolio of top-ranked Masters programmes and receive advice on the right programme for you. NEW HONG KONG Wednesday 28 November 2012: Novotel London Tower Bridge, 10 Pepys Street, London EC3N 2NR YORK Thursday 29 November 2012: Hilton Canary Wharf, South Quay, Marsh Wall, London E14 9SH DUBAI Please join us at any time between 11.00 and 15.00 Find out more and register your interest at: www.london.edu/meetlbs/ Email: [email protected] or call: +44 (0)20 7000 7500 TUESDAY 20 NOVEMBER 2012 2 NEWS To contact the newsdesk email [email protected] It is shocking just how much tax most workers have to pay NCE again, Boris Johnson is taxable income – are expected to pay being hammered, with even mini- trously deluded. Stamp duty was making sense on tax. He is an astonishingly large £14.8bn in mum wage earners paying a scan- hiked to 7 per cent (or more in some right to be calling for a lower EDITOR’S income tax, substantially more than dalous share of their wages in tax. cases) for homes worth £2m+ this O tax economy and to oppose the £13.9bn paid by the bottom 13.6m Economists usually agree that year. In London, sales under £2m increasing the tax on homeowners – taxpayers who earn £20,000 or less (a employees, not employers, pick up the dipped one per cent in the third quar- while simultaneously demanding the LETTER number which is in fact even larger as bill for national insurance, even that ter. But sales of homes worth £2m- elimination of the loopholes that it doesn’t include those whose earn- part misleadingly known as employ- £5m collapsed 53 per cent compared mean that the current system is ings are so low that they fall below ers’ NI (wages would be commensu- to the third quarter of 2012, accord- riddled with problems, especially ALLISTER HEATH the income tax threshold). rately higher in their absence). The ing to Land Registry data analysed by when it comes to corporation tax. On average, those earning £500,000 combined tax on labour is extremely London Central Portfolio. This will The reason Boris’ position makes in London – pay a massive amount. or more pay an average of 43-44 per high. Income tax and NI mean work- have triggered a decline, not an more sense than most other politi- The top one per cent – those on cent of their incomes in income tax ers pay a shocking 40.25 per cent tax increase, in tax receipts for that cate- cians’, including many of those in incomes from employment, self- (they also pay national insurance as on earnings between £8,105 and gory of homes, in a stark illustration government, is that the Mayor realises employment, interest or dividends of well as indirect taxation). The top £42,475; 49 per cent on £42,476- of Arthur Laffer’s famous curve. that while there is plenty of avoid- £156,000 or more a year – are expect- 2,000 earners pay £2m each on aver- £100,000; 66.1 per cent between Britain is obsessed with tax avoid- ance, and that this needs to be dealt ed to pay 24.2pc of all income tax age in income tax alone. This is why £100,000-£116,210; and 57.82 per cent ance. This will only be solved through with, the silent majority of non- 2012-13, even though they will earn the decline of the City and the drop in on £150,000 or above. Of course, there comprehensive tax reform. But most avoiders already pay far too much tax. only 10.8 per cent of all income. The the number of high earners is terrible is much more to tax than direct tax: people are already appallingly over- The amount handed over by most pro- top 10 per cent – on £50,500 or more a news for the Treasury: in 2009-10, Vat and duties hit everybody but the taxed.