Tax warning over Labour spending plan
Research suggests that Labour’s vow to boost government spending, end austerity and reverse most benefit cuts would come with large tax hikes. Leader Jeremy Corbyn has pledged £250bn of extra spending in the next decade under a Labour government but analysis shows that a separate pledge to cut public debt would mean tax increases would be required to provide the extra spending. The FT analysis suggests Labour would need to find at least £26bn in new tax rises to deliver its measures and live within its own budgetary rules. Deputy Conservative chairman Paul Scully said Mr Corbyn’s “ideological” plans would see “huge tax hikes for working people.” “From income tax to new taxes on homes, Labour would once again hit people in the pocket with a raft of tax raids,” he added. Meanwhile, Matthew Lynn in the Telegraph considers the impact a Labour government under Jeremy Corbyn and shadow Chancellor John McDonnell would have on the economy, noting that corporation tax would be increased to 26% from 19% and that the top rate of tax would be increased “and many more people would be swept up in its net”.
Raid on dividends helps bring record income tax haul for HMRC
Income tax receipts have soared to a record £191bn for the 2018-19 tax year, representing a 6% increase on the previous year. Income from self-assessment income tax receipts was 12% higher than in 2017-18, driven in part by a cut to the amount you can earn from dividends without paying tax. Last year, the Government cut the dividend allowance to just £2,000, from £5,000 in April 2018. This came as British firms paid out a record £100bn in dividends. High levels of employment and rising wages are also thought to have contributed to the taxman’s record haul.
Savers urged to check tax
The Low Incomes Tax Reform Group has urged savers to check the amount of tax they are paying, saying it has received reports of inaccurate income figures, suggesting savers could be paying too much or too little tax. Senior technical manager Kelly Sizer says: “HMRC receives information from banks after the end of the tax year, but this may not always be entirely accurate. It is the taxpayer’s responsibility to advise HMRC of accurate figures.”
Source: Daily Mail (04/09/2019)
Senior bankers warn that SMEs are not ready for no-deal Brexit
Sky News reports that senior bankers have warned Chancellor Sajid Javid that the majority of UK SMEs remain largely unprepared for a no-deal Brexit. It is understood that they told Mr Javid that while they had made the necessary contingency plans if the UK leaves the EU without a deal next month, many of their SME clients had not. According to Sky News, someone in attendance said the bosses of major UK lenders including HSBC and Lloyds Banking Group were among those highlighting continuing concerns about the readiness of SMEs and possible implications for their supply chains. Among those present at the meeting were Jes Staley, Barclays chief executive, Goldman Sachs International chief executive officer Richard Gnodde, and David Schwimmer, CEO of the London Stock Exchange Group. Bruce Carnegie-Brown, chairman of Lloyd’s of London, John Kingman, chairman of Legal & General, and Howard Davies, chairman of RBS, also attended.
Source: Sky News (03/09/2019)
HMRC urged to clarify customs guidance
The Federation of Small Businesses (FSB) has called on HMRC to clarify Brexit guidance over concerns that existing advice is misleading. Letters sent to almost 90,000 companies which trade with the EU have added to uncertainty over Eori numbers – the customs identification code that businesses will need to continue trading with the EU if Britain exits the bloc with no deal in place. Many VAT-registered companies have been issued numbers by HMRC, but there remains confusion, with some unsure over whether they also need one from an EU country. While HMRC has indicated that the majority of traders would only need a UK Eori number, the correspondence seemingly contradicts this. Craig Beaumont, director of external affairs at the FSB, said: “At a difficult and confusing time, clarity of language and clear signposting for detail are both vital to help small firms prepare, and to provide reassurance. HMRC should rewrite these letters and send out a fresh batch, clarifying that most people will not need a second EU Eori number as well as a UK one.”
Source: The Times (03/09/2019)
Brexit readiness fund launched
The Business Secretary Andrea Leadsom has launched a £10m grant scheme for business organisations and trade associations to support businesses in preparing for Brexit ahead of October 31. The fund is open to business organisations and trade associations throughout the UK and will support events, training and the production of advice packs to assist businesses in making sure they are fully prepared for a Brexit. Ms Leadsom said: “The funding we are announcing today will mean business organisations from all sectors across the country can stand resolutely behind businesses large and small to support them in preparing for, and seizing the opportunities of, leaving the EU.”
Manufacturing falls to seven-year low
The UK manufacturing sector fell to a seven-year low in August, sending the pound down against all of the major currencies. The purchasing managers’ index (PMI) produced by IHS Markit/CIPS fell to 47.4 in August, down from 48 in July. A figure below 50 indicates the sector is contracting. New orders fell at the fastest pace for seven years, and business confidence fell to its lowest level since the survey first began to track the measure in 2012. Rob Dobson, director at IHS Markit, commented: “High levels of economic and political uncertainty alongside ongoing global trade tensions stifled the performance of UK manufacturers in August. The global economic slowdown was the main factor weighing on new work received from Europe, the USA and Asia. There was also a further impact from some EU-based clients routing supply chains away from the UK due to Brexit.”