News Roundup 31st May 2018
News Roundup 31st May 2018
Top rate no longer just for top 1%
Half a million people will be dragged into the top rate of tax within three years, according to analysis of HMRC data by Saffery Champness. The 45% rate is paid on earnings over £150,000, a threshold which has not changed in seven years. In the current tax year a record 393,000 people will pay the “additional” rate, up 67% on 2011. Mike Hodges, a partner at Saffery Champness, said: “There is an argument for raising the threshold for additional rate tax as it has remained the same for seven years and is no longer a tax on just the 1% […] I don’t think people on £150,000 think they’re super wealthy – they’d be more likely to think they were comfortable and doing OK.” Sam Dumitriu, head of research at the Adam Smith Institute, suggests all thresholds are indexed to real wage growth to avoid “stealth” tax rises.
Radical overhaul of Isas recommended
The Office of Tax Simplification (OTS) has signalled that it plans a shake-up of Isas with a review recommending making them simpler, more flexible and easier to use. The review suggests removing the ban on partial transfers of money between Isas in the year in which it is invested; removing the restriction on investors taking out more than one type of Isa each year and making it easier to transfer money from a Help to Buy to a Lifetime Isa (Lisa). The review also says that savings could be exempt from tax for basic-rate tax payers and pensioners. James Hender at Saffery Champness says: “Isas have become so complicated over the past few years, it is putting people off. Anything that can be done to keep it simple is highly welcome.” The OTS will also work with HMRC to find ways to stop people being charged high emergency tax rates on the withdrawal of lump sums from their pensions. The FT notes that the OTS report did not cons ider tax relief on pensions.
Savers remain uncertain over pensions tax relief
HMRC is seeking to appeal a tribunal ruling that found pension savers were entitled to tax relief when they put non-cash assets into a self-invested personal pension (Sipp) or small self-administered scheme (Ssas). HMRC said last year that it would no longer offer pension tax relief on such contributions and most pension providers stopped accepting non-cash contributions. But savers were left uncertain, leading pension provider Sippchoice to bring the case on behalf of a client. Martin Tilley, the director of technical service at Dentons, which owns Sippchoice, says HMRC’s position is odd given that the rules allow someone to put a cash lump sum into a Sipp and use that to “buy” some of their non-cash assets, such as a portfolio of shares held in an Isa, and then, once the shares are in the Sipp, to claim tax relief. “That is a permitted transaction. It is a longwinded way of doing the same thing,” Mr Tilley says.
The Times, Page: 73
Executors take care – you are liable for IHT
Adam Williams details how the executor of a will can find themselves liable for the IHT bill of the estate in the Telegraph, even if they are not a beneficiary. One case offers a cautionary tale, says Williams. Glyne Harris was left owing HMRC £340,000 in death duties after discharging the assets of an estate on what he claims was the understanding that the beneficiary would pay the IHT owed. But the beneficiary left the country for Barbados without paying up. Mr Harris launched an appeal but tribunal judge Nicholas Aleksander rejected it. John Annetts, of Howard Kennedy, commented: “It doesn’t necessarily depend on the size of the estate, but it can pay to instruct a lawyer where, as in the case with Mr Harris, inheritance tax is payable.”
The Daily Telegraph, Money, Page: 1, 2
Late payment harming investment
The FSB said that seven in ten small companies were not planning to increase investment over the next three months, an 18-month high, while one in seven were planning spending cuts, the highest proportion since 2016. FSB chairman Mike Cherry said that the fall in investment was worsened by large companies failing to settle their bills on time, in addition to uncertainty over Brexit.
Data regulator will not make example of small businesses over GDPR
The FSB is urging the Information Commissioner’s Office (ICO) to show understanding in its enforcement of GDPR, claiming many small firms in the UK are still not ready for the regulation. Information Commissioner Elizabeth Dunham said they would not be expecting “perfection” from small firms from day one.
The Independent, Page: 15
Add a public utility element to make audit fit for purpose
In a letter to the FT, Peter Newborne suggests boosting the role of audit by requiring auditors to verify companies’ disclosures in sustainability reports, a move that could help combat climate change too.
PERSONAL FINANCE NEWS
Personalised payment schedules could reduce arrears
Roughly three million people were in arrears on an essential bill last year, with women most likely to have fallen behind on payments, debt charity StepChange said. The estimate comes as the latest figures from UK Finance, which represents the major banks, said credit card spending in April was 9.8% higher than a year earlier, at £10.1bn. StepChange said that an estimated 9.3m people used credit last year to meet a household need, with arrears on council tax, water bill, rent and mortgages more common among women than men. Peter Tutton, head of policy at StepChange, suggested creditors could develop “more flexible and personalised payment schedules for people whose incomes fluctuate.”
Worst GDP figures for five years
The ONS has confirmed that UK GDP growth slowed to 0.1% in the first three months of the year, the worst quarterly performance for five years. The slowdown was caused by factors including the weakest household spending for three years and falling levels of business investment. John Hawksworth, chief economist at PwC, said he believed the ONS figures overstated the underlying weakness of the economy. “We expect some recovery in the second quarter, with GDP growth of around 1.3% for 2018 as a whole,” he said.
The Times The Guardian, Page: 41 City AM The Sun, Page: 54 The Independent, Page: 41
Drechsler pledges to use Brexit as opportunity for business
Paul Drechsler, the CBI president has had a change of heart over Brexit, insisting he will now make an “opportunity” out of Brexit for British businesses. He is to leave the CBI in July and join lobby group London First, where he pledged to “use Brexit as an opportunity to improve the environment for the capital’s businesses and residents.”
The Times, Page: 58 City AM
Jackson’s estate nursed back to health
A crack team of accountants and lawyers have turned the fortunes of Michael Jackson’s estate around. They claim to have generated gross earnings exceeding £973m since 2009, at which point Jacko was more than £370m in debt.
The Sun, Page: 43
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