News Roundup Monday 1st October 2018
News Roundup Monday 1st October 2018
PM promises lowest corporation tax in G20
Theresa May will today tell a US audience that Britain will have “the lowest rate of corporation tax in the G20” after leaving the EU. In a pitch to corporate leaders to invest in the UK, the Prime Minister will recommit the Government to cutting corporation tax from 19% to 17% as part of an “unequivocally pro-business” tax regime, with or without a Brexit deal. Mrs May will say the British economy will be “knowledge-rich, highly innovative, highly skilled and high quality but with low tax and smart regulation.” However, the Times’ David Smith warns the Conservatives they are in danger of losing the political argument for lower taxes. He says that before the financial crisis, any party that proposed higher taxes on top earners was committing electoral suicide, but support for Labour’s policies suggests this is no longer the case.
The Daily Telegraph, Page: 1 Daily Mail, Page: 4 The Sun, Page: 6 Daily Express, Page: 1, 5 Yorkshire Post, Page: 1 The Times, Page: 41
Rip up IHT, says lawyer
James Badcock, partner at Collyer Bristow, argues that IHT should be abolished and more tax collected during people’s lifetimes. He says that failing that, the main residence nil rate band should be converted to a straightforward increase of the nil rate band to £500,000. Proceeds from life insurance should be automatically exempt from IHT rather than only if “written into trust”, he adds. Badcock also notes that the widespread dislike of IHT is demonstrated by the positive response to the news that the late Bruce Forsyth arranged his financial affairs to “deftly dance” around the levy.
HMRC tax crackdown victimises easy targets
Paul Lewis, presenter of BBC Radio 4’s Money Box, says HMRC’s crackdown on contractor loan schemes dating back to 1999 amounts to retrospective legislation.
HRMC releases R&D statistics
New statistics from HMRC reveal that there have been 39,960 R&D tax credit claims for 2016-17, of which 34,060 are in the SME R&D scheme. In the same period, £3.5bn of R&D tax relief support has been claimed, corresponding to £24.9bn of R&D expenditure. A breakdown of the statistics show that R&D claims are concentrated in companies with a registered office in London, the East of England, or the South East. Between the launch of the R&D tax credit scheme in 2000/01, and 2016/17, over 240,000 claims have been made and £21.4bn in tax relief claimed.
Budget predictions begin
The Times looks ahead to next month’s Budget, speculating on the areas where Philip Hammond could tinker with policy. It suggests the tapering of the annual pension allowance is likely to be abolished and replaced by a straight cap at, say, £125,000. The nil-rate residence band for IHT could also be scrapped, but tampering with stamp duty looks less likely. The government also plans to increase the personal allowance from £11,850 to £12,500 by 2022.
Majority of small firms paid late
Research from the Federation of Small Businesses (FSB) shows about 85% of small firms that operate within European supply chains are being paid late. The FSB report Pay it Forward: Lessons and recommendations for Europe from the UK payment landscape, reveals that despite attempts to help firms, like the introduction of the Late Payment Directive, poor payment practices are still found throughout Europe.
Yorkshire Post, Page: 19
Middle earners revolt against pension tax
More than 20 bodies representing tens of thousands of public servants across Britain have united to lobby the Government to change the taxation of pensions. The Treasury Select Committee has urged Philip Hammond to cut the amount that savers can put into their pensions each year, thereby saving the Government some of the £24.1bn it is forecast to forgo in tax relief this year. But the group of 21 employee bodies said penalties that once affected only the highest earners were already hitting those on more modest incomes of around £50,000 a year after repeated cuts to pension tax relief limits.
The Daily Telegraph, Money, Page: 5
Annual allowance tax take triples
Figures released by HMRC reveal that the amount savers have contributed above the annual allowance on pensions has increased to £561m in 2016/17, the year the tapered annual allowance for high earners came into effect. Contributions above the lifetime allowance also increased from £66m to £102m in 2016/17 as the limit decreased from £1.25m to £1m.
Savers turn to Ifisa
Figures from HMRC show a surge in the number of savers taking out the tax-free Innovative Finance Isa, with interest in the product having risen fivefold in the last year.
Daily Express, Page: 29
Give all UK babies an ISA, says think-tank
A Conservative think-tank has said every baby born in the UK should be given £500 in a savings ISA opened by the Government to help them buy their first home. Bright Blue urged Philip Hammond to open up the Lifetime ISA (LISA) savings account to anyone under 18 as part of the Autumn Budget.
The Daily Telegraph, Page: 2
Landlords pass on tax rises to tenants
A record number of tenants were hit by rent rises last month, according to figures collated by Arla Propertymark. Its figures show lettings agents reporting that 40% of tenants had experienced rent rises in August, up from 31% in July, and Arla CEO David Cox said this was because of the rising cost of tax measures announced by George Osborne, the former chancellor.
£80m saved in stamp duty by first-time buyers
According to the latest data from HMRC, almost £80m has been saved in stamp duty by first-time buyers in London and the South-East since the tax was scrapped on properties costing less than £300,000. Stamp duties helped raise the Treasury a total of £12.9bn in the last financial year, up 10%. With an average of £8,400 on each deal, just under £9.3bn stamp duty was paid on residential purchases nationally, up 8%.
Evening Standard Financial Times, Money, Page: 20
Pension fund deficits set to worsen as rates stay low
Pension funds are facing bigger deficits for the foreseeable future after the Bank of England warned interest rates will not return to the levels seen in the second half of the 20th century. Gertjan Vlieghe, a policymaker at the Bank of England, has warned that even when quantitative easing is unwound long-term interest rates will stay low. A decade of rock-bottom interest rates has already squeezed final salary pension schemes, sending deficits up to £200bn, according to PwC’s Skyval index. The Pensions and Lifetime Savings Association has said the industry is prepared for low rates but more freedom to choose unconventional investments would help.
Customs delays could bankrupt firms
Research from the Chartered Institute of Procurement and Supply suggests up to 10% of UK businesses would face bankruptcy if goods were delayed by 30 minutes as a result of Brexit trade friction. The study also found almost a quarter of companies are preparing to stockpile goods in the future and 4% have already started to do so.
The Daily Telegraph, Business, Page: 4
Remortgaging soars while mortgage approvals fall
Remortgaging soared 9.2% in August, according to UK Finance, while the number of mortgages approved for house purchases was almost 5% lower in the month when compared with the same time last year. Gross mortgage lending for the total market in August was £24.1bn, down 1.2% on a year earlier.
City AM The Times
Economy remains resilient
Analysis by the Guardian shows the British economy is putting in a resilient performance, led by strong consumer and business activity, despite the political upheaval surrounding Brexit. Economists said consumers shrugged off the impact of higher inflation and prolonged their summer spending spree over the past month, while there was also an upswing for growth in the dominant services sector. However, PwC’s Andrew Sentance warned: “If Brexit negotiations do go badly, there could be a sharp downward correction in the UK economy in the first half of next year.”
The Guardian, Page: 28-29
Surge in HMRC ‘scam searches’
Consumer complaints site Resolver has reported a 200% weekly increase in searches related to identifying HMRC scam messages. The site urges caution when taxpayers receive unsolicited emails and texts.
Norton anti-tax dodging
Graham Norton has spoken of his relaxed attitude towards paying tax. “I just don’t get the not-paying tax thing,” he says. “It’s just stupid and very short sighted. You see people who are worth a billion and they’re still doing tax dodges and you think how can you be bothered?”
Daily Mirror, Page: 14-15
Millennials skint on payday
Millennials are the group most likely to have run out of money by the end of payday, according to KPMG. A study by the firm found one in five 25 to 34-year-olds spend over 60% of their income on payday, while 1% end up in the red.
The Sun, Page: 51
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