News Roundup Friday 31st August 2018
News Roundup Friday 31st August 2018
Scrap tax relief for entrepreneurs, says think tank
The Resolution Foundation has said entrepreneurs’ relief should be scrapped to help to fund the government’s £20bn pledge for the NHS. The think tank said the tax break is “expensive, ineffective and regressive” at an estimated £2.7bn a year and “has good claim to being the worst of Britain’s main tax reliefs”. It also said there is “no evidence that it has led to any substantial increase in genuine entrepreneurship.” The relief was introduced in 2008 by Alistair Darling in response to a row over changes to CGT and was intended to encourage people to start or join new companies by promising a lower rate of CGT on their investment when they sold out. The generosity of the scheme has since been extended so that start-up owners pay half the 20% rate of CGT on up to £10m of gains, with a maximum individual benefit of £1m.
Tax complainants encouraged to use adjudicator
The Mail reports that HMRC has dismissed tens of thousands of complaints about incorrect tax bills, codes and unpaid credits without referring them to an independent adjudicator. Tax experts say many people are unaware they have the right to escalate their complaint to the Adjudicator’s Office, where they can get an impartial hearing. Chas Roy-Chowdhury, head of taxation at the ACCA, said: “Some people don’t want the hassle of going to the adjudicator. Others are worried they may get into more trouble if they lose. But this service is free and open to everyone so more people should use it.”
Daily Mail, Page: 41
Toxic mix’ of tax rules and pensions
Malcolm McClean, senior consultant at Barnett Waddingham, comments on complex tax rules such as the tapered annual allowance for high earners, writing: “Apart from a few accountants and other self-appointed ‘experts’, I am not sure there are many people who fully understand how the taper works.” He also questions the need for the lifetime allowance and money purchase annual allowance.
Tax incentives drive video games growth
Use of tax incentives to drive growth in the UK’s video game industry has risen by over 30% in the last year, according to Moore Stephens. Statistics from HMRC show £105m was claimed in Video Games Tax Relief (VGTR) in 2017/18, up from £79m in 2016/17.
Corporation tax receipts rocket
Figures from the Office for Budget Responsibility show corporation tax receipts have surged since the rate was cut. The levy raised £57.6bn last year, when firms handed over 19% of profits. That was 44% more than in 2010 when corporation tax was 28%. Corporation tax receipts have also risen 26% since the EU referendum. Sam Dumitriu of the free market Adam Smith Institute think-tank said the figures should prompt ministers to reduce tax on firms which invest. “A competitive corporate tax rate has made Britain a more attractive place to do business,” he said.
Daily Mail, Page: 69
HMRC offers guidance on digital tax accounts
HMRC has published a set of materials to provide clarity on digital tax accounts, amid concerns that too many company owners are still in the dark. Although the materials are also aimed at accountants, much of the practical guidance is intended for businesses facing the mandatory MTD VAT service from April 2019.
Africa ties are good for small firms
The Federation of Small Businesses has welcomed Theresa May’s plans to boost Britain’s investment in Africa after Brexit. Mike Cherry, national chairman, said strong trade ties with Africa will be crucial after Brexit, with 35% of the FSB’s exporting members sending their goods to Africa.
The Independent, Page: 3 The Guardian
Scottish firms benefit from £32m rates cut
Last year’s business rates shake-up in Scotland has saved more than 4,000 businesses around £32m in total. Since the rates revaluation, there have been 73,845 appeals lodged, more than 16,000 of which have been resolved so far. Of those, 4,180 firms had £69m wiped off their rateable value, meaning their rates bill is now £32m lower. A Scottish government spokesperson said: “We have delivered the most competitive business rates package of reliefs in the UK, funding rates relief of around £720m in 2017-18. We are also taking forward the recommendations of the Barclay Review, which recognised that reform of the appeals system is needed to modernise the approach, reduce appeal volume and ensure greater transparency and fairness.”
Daily Express The Herald
SME owners to write RBS report
SME Alliance, a group of business owners, are compiling a report into Royal Bank of Scotland’s alleged misconduct. They claim their report will cover new evidence related to the bank’s global restructuring group. This follows the Financial Conduct Authority saying regulatory action was not possible as commercial lending activities fall outside the scope of its powers. City AM says the regulator could still examine any new evidence it receives.
City AM The Daily Telegraph, Business, Page: 28
Lump sum payouts putting pension schemes at risk
The Pensions Regulator has warned that “overly generous” lump sum payouts to people in retirement could be putting pension schemes at risk. It has urged 14 company retirement schemes to review their cash sum offers. The amount withdrawn from the traditionally generous company pension plans has risen from £7.9bn in 2016 to £20.8bn last year, according to figures from the Financial Conduct Authority.
Hot summer brings an end to falling shop prices
The summer heatwave has pushed shop prices into inflationary territory for the first time in five years, according to the British Retail Consortium. Prices in the shops rose by 0.1% in August compared with a year earlier, the first time they have increased since April 2013.
Land values raise UK’s wealth to £10trn
The net value of all of the UK’s assets topped £10trn for the first time in 2017, thanks to surging land and house prices. The ONS said almost all of the rise to £10.2trn from £9.75trn was fuelled by a £450bn rise in land values. Housing wealth now makes up 17.8% of the UK’s net worth, and added to land this takes the two to a total of 70.7% of net assets. The steady increase in land values is expected to trigger further calls for a land value tax or new rules allowing local authorities to benefit from the rise in values by allowing them to buy land earmarked for development.
Carney asked to stay on as BoE governor
Mark Carney has reportedly been quietly approached by the Government to stay on as BoE governor for another year. It is understood that the Treasury is keen for him to stay on until 2020 so that he can provide continuity during the turbulence of Brexit. However, a Treasury spokesperson denied it had approached Mr Carney and said the government was still planning to advertise for the position “in the next month or two”.
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