News Roundup Tuesday 23rd July 2019

NEWS ROUNDUP

TAX NEWS

Scottish income tax short of forecast

HMRC figures show that while the amount of income tax revenue raised by the Scottish Government in 2017/18 went up by 1.8%, it fell £941m short of original forecasts. The figures mark the first time revenue from Scottish taxpayers has been calculated since devolved powers over income tax began in 2017. Scotland’s Finance Secretary Derek Mackay said Scottish income tax revenue increased by £197m between 2016/17 and 2017/18 to £10.9bn, while a forecast set out in the draft budget for 2017/18 had been £11.8bn. Mr Mackay, who says he is creating a more progressive tax system, commented: “I remain of the view that it would be beneficial for the people of Scotland if we had full control all aspects of the income tax system.” Liz Truss, Chief Secretary to the Treasury, said: “Scottish ministers should take responsibility and focus on the decisions necessary to get Scotland’s economy growing faster to avoid shortfalls in tax receipts.”

The Daily Telegraph Daily Express The Scotsman, Page: 10 The Press and Journal, Page: 14 BBC News

Opinion: Reflecting on ‘regressive’ tax cuts

Ryan Bourne, who occupies the R Evan Scharf Chair for the Public Understanding of Economics, considers suggestions that Boris Johnson’s plans to raise the 40p income tax threshold are “regressive”, questioning a mindset that means “progressive” is now used synonymously with “good” and “regressive” with “bad.” Writing in the Telegraph, he says that if Conservative leadership candidates Mr Johnson or Jeremy Hunt are to achieve “a dynamic economy with good lifetime support for the least well-off, they’d do well to avoid judging individual policies through the static, progressive lens.”

The Daily Telegraph, Page: 32

PENSIONS NEWS

HMRC has ‘no idea’ how many trigger pensions tax trap

Sir Steve Webb, policy director with Royal London, says HMRC “has no idea” how many individuals had been fined for not notifying one pension scheme about withdrawals from another.

Financial Times

SMEs NEWS

Chancellor calls out late payment culture

Chancellor Philip Hammond has called for “radical cultural change” to end the scourge of late payments – which puts 50,000 small firms out of business every year. The talks – attended by leading business groups FSB and CBI as well as a number of firms – follow recent government action including proposals to fine those failing to comply with the rules and beefing up the Small Business Commissioner’s enforcement powers.

Wired.Gov

PROPERTY NEWS

Rent warning for public sector workers

Martina Lees in the Times looks at the climate for buy-to-let landlords, saying tighter buy-to-let mortgage rules and cuts in tax relief on mortgage interest have pushed investors to change strategy. She cites a PwC report which suggests rents have become unaffordable for key public sector workers in London, the southeast, east and southwest. While the average earner has to spend more than 30% of their annual income on rent, the report says that the average affordability ratio in London could reach 47% in five years’ time, up from 42%. PwC’s John Hawksworth comments: “We risk seeing professions that are integral to the UK’s public services struggling to afford to rent in several regions.”

The Times, Bricks and Mortar, Page: 10

CORPORATE NEWS

£26k of tourism agency expenses ‘for personal benefit’

Chris Burn in the Yorkshire Post details scandals at tourism agency Welcome to Yorkshire, noting that BDO was unable to assess whether almost £900,000 of expenses claimed in six years by senior managers were justifiable because a lack of assessment of the business value of such spending, but did identify £26,000 worth of expenses that were deemed to be chiefly for personal rather than business benefit.

Yorkshire Post, Page: 13

INTERNATIONAL NEWS

G7 agrees urgent reform is needed on tax rules

French finance minister Bruno Le Maire believes G7 countries agreeing to change the international tax regime to ensure fair taxation of big multinationals marks a “real advance for fairer tax for the 21st century.”

Financial Times, Page: 7

ECONOMY NEWS

Second-hand stores drive retail sales

According to the Office for National Statistics, retail sales volumes rose by 1% in June, up from a fall of 0.3% in May, thanks to a boost in sales of second-hand goods at charity shops and antique dealers. Non-food stores contributed 1.6% to annual growth, while second-hand stores made the largest contribution to the non-food category, with sales increased by 92.9% in the year to June. Clothes sales staged a partial recovery, rising 1.2% following May’s 3.8% drop, as consumers flocked to summer sales in June, however, department stores continued to struggle, with sales falling by 0.4%, their sixth consecutive month-on-month decline. Howard Archer, chief economic adviser to the EY Item Club, said: “Consumers have clearly been more resilient than most other sectors of the economy and have seemingly largely brushed off Brexit concerns, no doubt helped by the overall improvement in their spending power since mid-2018 as well as record high employment.”

The Times Financial Times The Guardian The Daily Telegraph

OBR hits out at Hammond

The Office for Budget Responsibility’s latest fiscal risks report has warned that policy risks to the public finances in the medium term “are significant and look greater than they were two years ago”, suggesting that Chancellor Philip Hammond’s recent statements show he “has all but abandoned the Government’s legislated objective to balance the budget by the mid-2020s.” The report, also criticises Conservative leadership contenders for making “a series of un-costed proposals for tax cuts and spending increases”. It warns that “additional tax cuts or spending increases would push government borrowing and debt up from the levels expected in our forecasts and that there is no war-chest or pot of money set aside that would make them a free lunch.” Philip Aldrick in the Times considers the report, noting that taxes raised £740bn for the state last y ear “but they cannot be taken for granted”.

The Daily Telegraph, Page: 31 The Independent, Page: 5 The Times, Page: 36 Evening Standard

Contact Paul Southward.

Paul Southward