Unearned income rises while average family income falls
Figures from HMRC analysed by the Observer indicate that the “unearned income” of the most well-off people in Britain more than doubled between 2010-11 and 2015-16. Income from property, interest, dividends and other investment income rose by more than 40% during the period, but among the top 10% of Britons, unearned income rose from £19,000 each to more than £38,000. Meanwhile, average weekly earnings from paid employment fell in real terms between 2010 and 2016. Liam Kennedy, research officer at the thinktank Class, said: “These figures go to show how our economy rewards those with wealth and not those who work – we need a much more progressive tax system that reflects this. Aligning capital gains tax with taxes on income would be a start, but we need to think about replacing inheritance tax with a lifetime gifts tax to prevent unjust, intergenerational transfers of wealth.” A Treasury spokesperson said: “The top 1% of income taxpayers pay 29% of all income tax, and our highly redistributive policies mean the poorest households receive £4 in public spending for every £1 they pay in tax.”
Source: The Observer (28/07/2019)
One in ten keep assets offshore
HMRC has revealed that one in ten taxpayers in Britain has offshore financial interests after it received information through the new Common Reporting Standard, which allows more than 100 countries to exchange financial data automatically. The taxman told the Treasury select committee it had received information about 5.67m offshore accounts in the past year and had written to tens of thousands of people who may owe tax.
Source: The Times (31/7/2019)
OTS consults on simplifying tax for self-employed
The Office of Tax Simplification (OTS) is reviewing tax reporting and payment arrangements amid concerns that the rise of the gig economy has left the self-employed struggling with tax compliance. The OTS said that it was looking to explore “options for information reporting or payment of tax to take place closer to real time” after self-employed people said they would like the option to report information and pay tax periodically, or on the completion of jobs.
Source: The Times (29/07/2019)
Boris in tax pledge to draw investment
Boris Johnson has said he is preparing a package of tax cuts and incentives for businesses to invest in the UK. The Prime Minister said: “We will begin right away on working to change the tax rules to provide extra incentives to invest in capital and research.” “We will prepare an economic package to boost British business and lengthen this country’s lead as the No 1 destination in this continent for overseas investment,” he added.
Source: The Times (26/07/2019)
Walkout threat hits bank compensation scheme
Business representatives have threatened to withdraw their support for a new banking compensation service for small companies unless it is overhauled. The business banking resolution service is aimed at companies too large to access the Financial Ombudsman Service but lacking the financial clout to pursue claims through the courts. However, two of the groups closely involved in the design of the scheme have threatened to walk away unless their demands are met, Nikki Turner, director of SME Alliance, said she had suspended participation in the main steering group designing the new compensation service until such time as its eligibility criteria “is properly considered and revisited”. The all-party parliamentary group on fair business banking said it would also leave the steering group unless wholesale changes are made.
Source: The Times (26/07/2019)
R&D tax credits could lessen pain for SMEs preparing for Brexit
Allie Renison, head of European and trade policy at the Institute of Directors (IoD), considers the complexities facing businesses preparing for Brexit. She says at least a third of IoD members say they can adjust only after they know what no-deal looks like and that although there is no silver bullet the Government could do two things to help. Firstly, a voucher scheme would help SMEs access approved legal, tax and professional services and offset the cost of compliance and planning advice. Secondly, the Chancellor could make Brexit planning tax deductible by expanding the scope of R&D tax credits to cover certain preparations, or by creating a new type of tax credit.
Source: The Daily Telegraph (30/07/2019)
No summer break for SME owners
A survey by Hitachi Capital Business Finance has found that almost 40% of small business owners will not have a holiday this summer due to a lack of money, time and fear of being away from the business. It also found that two-thirds of SME owners said that they had taken fewer than 20 days’ holiday, the legal requirement, over the past 12 months. “Business success is about more than just the balance sheet,” Hitachi managing director Gavin Wraith-Carter said.
Source: Sunday Express (28/07/2019)
Households remain upbeat as wages continue to rise
Consumers remain optimistic about their financial situation despite worries about the economy, according to GfK’s latest survey, with a sustained rise in real wages countering concerns over Brexit. However, households’ confidence did not extend to the wider economy, with the overall index for July standing at minus 11, albeit up from minus 13 last month.
Source: The Times (31/07/2019)
Pound falls again on no-deal fears
The pound has continued to fall on currency markets amid fears of a no-deal Brexit, hitting a fresh two-year low of $1.2120 against the dollar on Tuesday before recovering some ground. Sterling also slid against the euro, falling to €1.0881 at one point.
Source: Financial Times (31/07/2019) The Daily Telegraph (31/07/2019)
One in four have a second job
A poll of 2,000 workers for Vistaprint shows that a quarter of people have a second job to top up their earnings. These workers add an average of £6,604 a year after tax to their income, with 15% making as much as £12,000 a year. Almost two-thirds worked on their side business in the evenings so as to fit it around their career, with this typically taking up to 13 hours a week.
Source: Daily Express (26/07/2019)