News Roundup Thursday 4th April 2019
News Roundup Thursday 4th April 2019
Half a million over-65s pay too much tax
Around 520,000 older workers could be paying unnecessary tax on their state pension as they have not taken up the option of deferring it until they stop work, analysis from insurance specialists Royal London shows. It is suggested that those who defer can potentially get an extra 5.8% a year on their pension for the rest of their life for each year they defer. Sir Steve Webb, director of policy at Royal London, said: “There has been a huge increase in the number of people working past 65, and most are claiming their state pension as soon as it is available. If their earnings are enough to support them, it makes sense to consider deferring taking a state pension so that less of their pension disappears in tax.”
The Independent, Page: 59 The Daily Telegraph, Page: 2 The Times, Page: 4 I, Page: 11 Daily Mirror, Page: 24 Daily Mail, Page: 21 Daily Express, Page: 2 Yorkshire Post, Page: 4
Super-rich pay 10% IHT
Analysis of HMRC data following a freedom of information request by asset manager Canada Life shows that estates worth £10m or more paid an average of 10% inheritance tax in the 2015/16 tax year compared with 20% tax paid by estates worth £2m to £3m. Neil Jones, market development manager at Canada Life, said the richest people often had access to “myriad potential solutions in an adviser’s kitbag” to help mitigate IHT, adding that the difference in net tax rates “isn’t always down to the value of the estate or the type of assets held … It’s often about a willingness to plan.”
The Guardian, Page: 35
EU: Britain gave illegal tax breaks to multinational firms
The European Commission has ruled that a tax scheme introduced in 2012 by then -chancellor George Osborne gave illegal tax breaks to some multinational companies. Officials say the scheme “unduly exempted certain multinational groups from… UK rules targeting tax avoidance”. Margrethe Vestager, competition and policy boss for the European Commission, said a probe into the Group Financing Exemption found that the UK “gave certain multinationals a selective advantage by granting them an unjustified exemption from UK anti–tax avoidance rules. This is illegal under EU State aid rules. The UK must now recover the undue tax benefits.”
City AM Financial Times, Page: 3
Probate changes will see ‘death tax’ on shares
Critics say changes to probate fees could discourage investment in shares listed on the LSE’s Alternative Investment Market, wherein certain stocks qualify for “business relief ” and so are exempt from inheritance tax.
Cuts to UK pension tax breaks drive NHS doctors to retire early
Health Minister Jackie Doyle-Price has revealed that the 2016 cuts to pension tax breaks for high earners resulted in 2,000 NHS GPs taking early retirement between 2016 and 2018.
Workers boosted by allowance increase
The Daily Mail’s Sylvia Morris looks at the start of the new tax year, noting that the personal allowance for income tax is rising to £12,500, with Deloitte calculating that around 26m workers who pay the basic rate of tax will keep an extra £130 in their pockets over the year.
Daily Mail, Page: 47
Tax warning for royal baby
Fox Business host Ashley Webster has warned that Meghan Markle and Prince Harry’s child faces US tax liabilities as an adult if it has US citizenship.
The new tax year starts on 6th April and we have reviewed the tax changes that come into effect this April and you can check these out in the downloads below..
Personal tax changes
Business tax changes
Reeves accuses the Big Four of ‘anti-competitive’ behaviour
Rachel Reeves, chair of the business select committee, has accused EY, PwC, KPMG and Deloitte of “anti-competitive” behaviour, saying under-pricing has made it “very difficult for challenger firms to compete”. Writing in City AM, Ms Reeves also says the audit and consultancy arms of the Big Four should be divided to address a “lack of competition and quality.” She calls for a tougher regulator to replace the “passive and ineffective” Financial Reporting Council. In a counter argument, Maggie McGhee, executive director of governance at the ACCA, says dividing the audit and consultancy arms of the Big Four “will hinder access” to the specialist expertise they need to audit complex multinational companies.
Financial Times, Page: 2 City AM, Page: 19
Professor: Break up the Big Four
Karthik Ramanna, professor of business and public policy at Oxford University’s Blavatnik School of Government, agrees that the BEIS is right to champion the return of prudence to corporate reporting. Elsewhere, James Moore in the I looks at calls for EY, PwC, KPMG and Deloitte to be broken up, saying that while there are compelling arguments for doing so, “they’ve been that way for years and people have been talking about it for years.” He says that while the matter seems to be regularly up for discussion, “when it comes to action … Now is never the time.”
Financial Times I, Page: 39 The Independent
Debt repayment policy questioned
The Sun reports that people who owe money to HMRC are being left to pay more upfront than they need, saying a “deliberately misleading policy” is seeing tax officials fail to mention the minimum amount they would accept to set up instalment plans for outstanding tax bills. Patrick Sullivan, of the Parliament Street think tank, said “bullying” tax chiefs are “raking in cash from those who are struggling the most.” He added that staff “should be instructed to give honest advice in the best interests of the taxpayer.” John O’Connell, of the TaxPayers’ Alliance, commented: “A twisted and complicated tax system means people sometimes fail to make payments, especially the self-employed. Staff must not force people into doing something they don’t need to.”
The Sun, Page: 11
Office Outlet closures announced
Stationery retailer Office Outlet has confirmed 16 store closures following its collapse into administration – leaving 161 jobs at risk. Office Outlook stores set to close on April 7 include those in Newcastle, Plymouth and Stratford, while those set to close on April 10 include outlets in Cardiff, Manchester and Old Kent Road in London. Deloitte’s Richard Hawes, joint administrator, commented: “While we are still open to a sale of the business in part or in whole, we cannot continue trading all the stores indefinitely in an administration process.”
I, Page: 39 Daily Mail, Page: 69 City AM
Bolton in High Court fixture
Bolton Wanderers are due in the High Court today where they face a winding-up petition from HMRC for £1.2m in unpaid tax and other debts.
The Times, Page: 65 The Guardian, Page: 47 The Daily Telegraph, Sport, Page: 7 Daily Star, Page: 42 Daily Mail, Page: 78 Daily Mirror, Page: 51
Banks could extend small business disputes scheme
The banking industry will consider extending the scope of a new redress scheme for business owners. As well as a dispute resolution service , on which banks are working with representatives of small businesses, a new scheme will allow the owners of small companies to ask for past grievances against banks to be examined where their complaint has not been assessed by a previous compensation scheme. A spokeswoman for UK Finance, the banking industry trade body, said that the steering group setting up the schemes would consider looking at complaints going back to January 2000. Lewis Shand Smith, the independent chairman of the dispute resolution service implementation steering group, said that the service would be “key to rebuilding a relationship of trust between banks and their small business customers”.
CBRE: Brexit fails to daunt inward property investment
Martin Samworth, international president of commercial property services group CBRE, believes that inward investment in property is “as strong as ever”. He says that despite Brexit uncertainty, international investment in the UK continues thanks to a strong appetite from Korea, America and the Middle East. He adds that international investors are increasingly setting their sights on regional cities such as Manchester and Birmingham in both commercial real estate and residential, while new infrastructure is also gaining in popularity.
UK inflation highest of G7 countries, OECD says
Britain’s annual inflation rate was the highest of the G7 countries in February, according to data from the Organisation for Economic Co-operation and Development (OECD), due partly to the fall in the value of the pound pushing up the cost of imported goods. The UK inflation rate hit 1.8% in February, compared to the Eurozone’s 1.5%.
Brexit puts the brakes on UK construction
The UK construction sector contracted again in March, according to IHS Markit and the Chartered Institute of Purchasing and Supply (CIPS) construction purchasing managers’ index, which stood at 49.7 for the month – down from 49.5 in February and the first consecutive fall in output since August 2016. Notably, commercial construction was the worst performing area – with widespread reports of continuing Brexit uncertainty leading to lower client demand. Jonathan White at KPMG said: “It’s going to be a similar story for the months to come as we wait for more clarity to help make informed business decisions.”
No charge for striker
Brighton footballer Glenn Murray and his wife will face no criminal charges over an alleged £1.1m tax fraud, although HMRC have not ruled out a further investigation into the matter.
Daily Star, Page: 17 The Sun, Page: 11
Contact Paul Southward.