Plans to force workers to pay for COVID-19 tests scrapped
The Chancellor has dropped plans to force workers to pay income tax on coronavirus tests if their employers order them. HMRC guidance published this week had made clear that employees will face a taxable benefit in kind for private tests carried out in the workplace. Mel Stride, chair of Westminster’s Treasury Select Committee, said: “This new guidance is unclear and will worry a large number of workers. If these tests are to be treated as a taxable benefit in kind, the tax bill for workers could soon mount up.” The Government last night removed all references to the tax on tests from its website. A Treasury spokesman said: “Given the importance of widespread testing, we want to ensure that all employers who wish to provide third-party testing to their employees can do so without increasing their tax liability. So, we will introduce a new income tax exemption for COVID-19 antigen tests provided by employers. HMRC will amend its guidance as soon as possible to reflect this change.”
Source: The Daily Telegraph (08/07) Daily Express (08/07) Daily Mail (08/07) The Times (08/07)
Chancellor to announce immediate stamp duty cut
Rishi Sunak is expected to announce an immediate cut to stamp duty to boost the housing market. However, it is not yet known whether the temporary tax break will apply just to first-time buyers or all house purchases. The Chancellor is expected to raise the threshold from £125,000 to £500,000 – properties costing £500k accounted for nine in 10 of all transactions last year. However, experts have warned more support is urgently needed to boost the market, as fears grow that a COVID-19 recession will hammer prices.
Source: The Daily Telegraph (08/07) Daily Mail (08/07) The Sun (08/07) The Guardian (08/07)
Labour says wealth tax can help pandemic recovery
Labour has urged ministers to consider a wealth tax, saying rolling out a levy for wealthier people can help drive the recovery from the coronavirus pandemic. Shadow chancellor Anneliese Dodds said policymakers should “not increase taxes or cut support for low and middle-income people” during the crisis, saying those with “the broader shoulders” should be asked to make more of a contribution. She added that a “new settlement” was needed to address the injustice of the worst-off paying more tax proportionally than high earners. With Chancellor Rishi Sunak due to set out his latest update on the economy next week, Ms Dodds said the Government should consider imposing a wealth tax which would target assets rather than income.
Source: The Guardian (04/07) Financial Times (04/07) Daily Mail (04/07)
Think-tank urges tax rethink
Conservative think-tank Onward has suggested tax reform should be considered as the UK looks to ensure that borrowing ramped up amid the coronavirus crisis is brought under control without harming growth. This could involve a thorough review of tax relief and pushing ahead with new digital taxes. The think-tank’s Bounce Back report also suggests taxpayer money should be used to take a stake in businesses that were given government loans to help navigate the pandemic but are unlikely to ever be able to repay them.
Source: The Times (06/07)
Crisis creates platform for radical tax changes
The Telegraph’s Jeremy Warner says the coronavirus crisis provides the Government with an opportunity to push through radical tax reforms. He goes on to consider three proposals: wealth taxes, a point-of-sales tax partially or wholly to replace the increasingly broken business rates system, and the transformation of national insurance into a fully hypothecated system of social insurance to fund health and social care.
Source: The Daily Telegraph (08/07)
Pandemic revives the pre-pack
The Times looks at the pre-pack, saying the fast-track insolvency process that grew in prevalence during the financial crisis is making a return amid the coronavirus crisis. It notes that while critics suggest pre-packs reward incompetence at the expense of successful companies, supporters such as R3, the trade association for insolvency professionals, say they are an efficient way to rescue struggling businesses, save jobs and maximise returns to creditors. A poll by R3 found that a third of insolvency experts expected administration to be the insolvency and restructuring option they most commonly recommend over the next year.
Source: The Times (04/07)
UK banks ‘draw up code of conduct’ for coronavirus business loan defaults
UK Finance and the state-owned British Business Bank (BBB) have begun talks with commercial lenders in the hope of setting up industry-wide debt collection standards for government-backed coronavirus interruption loans, amid fears a high proportion of the loans will never be repaid. Loans granted under the flagship coronavirus business interruption loans scheme (CBILS) and bounce back loan scheme for SMEs (BBLS) have a one-year repayment free period, with the first repayments due in spring 2021. However, Bank of England governor Andrew Bailey was warned by an industry group last month that up to £36bn of emergency loans to SMEs risk turning toxic, with banks warning that up to 50% of BBLS were unlikely to be repaid. British banks are keen to avoid being perceived as pursuing SMEs for loan repayments too aggressively after a series of scandals surrounding lenders’ treatment of small firms following the global financial crisis.
Source: City AM (07/07)
Over two-fifths of employers plan redundancies
A survey by the think tank Bright Blue has found that 44% of businesses using the Government’s job retention intend to make redundancies when the support is withdrawn in October. Economists fear that redundancies will start rising from next month, when companies have to start paying national insurance and pension contributions, representing 5% of employment costs. Medium-sized businesses were most concerned about meeting these obligations from August, with 65% saying they would cut jobs when the scheme ends in October. Former Chancellor Norman Lamont says in the Telegraph that the Government should temporarily suspend or reduce Employers’ National Insurance Contributions to prevent a “tsunami of unemployment.”
Sunak to unveil ‘kickstart jobs scheme’ for young people
Rishi Sunak will today announce a new scheme to stave off youth unemployment as part of attempts to revitalise the economy following the COVID lockdown. A new £2bn “kickstart scheme” will subsidise six-month work placements for people on Universal Credit aged between 16 and 24, who are at risk of long-term unemployment. The Government said it would lead to “hundreds of thousands of new, high-quality government-subsidised jobs”. The Chancellor is expected to make his summer statement at 12:30 BST after PMQs, with changes to stamp duty and VAT also expected, alongside a £3bn programme to make homes and public buildings more environmentally friendly.