Tax burden on highest earners has become “dangerous”
Government figures show that for the first time the richest workers – estimated as those earning more than £75,300 a year – will pay just over 50% of the income tax collected by the Treasury. Twenty years ago the proportion of income tax paid by the top 5% was 39.6% but is expected to hit 50.1% this year. Prof Philip Booth, senior academic fellow at Institute of Economic Affairs, said: “A highly mobile group of people have become responsible for paying a greater and greater share of the tax take. This is dangerous. The tax base has become too narrow. Allowing a small number of better-off people to shoulder the cost of public services is a risky policy, politically and economically.”
Source: The Daily Telegraph (29//06)
Hunt and Johnson must ‘be honest’ over tax and spending plans
The chancellor has called on Jeremy Hunt and Boris Johnson to “be honest” about their tax and spending promises as the policies “greatly exceed” the Treasury’s coffers. Philip Hammond said the Treasury had “built up fiscal headroom to protect against the cost of a no-deal Brexit” and that money will only be available for extra spending if we leave with an orderly transition. The Institute for Fiscal Studies estimates that an incoming prime minister could probably spend about £15bn extra a year while keeping government debt falling. Mr Hunt’s spending plans so far could amount to about £29bn while Mr Johnson’s proposals would cost £25bn.
Johnson would introduce capital allowances for start-ups
Boris Johnson has promised to cut corporation tax and allow start-up businesses to offset capital against tax in an effort to boost their prospects. In a phone hustings with Tory members, Mr Johnson said: “Look at what Trump is doing. They’ve got growth running at 3.6%. He has been very clever in allowing businesses to offset capital investment in tax, with capital allowances. I think we should think about that sort of thing for start-ups, in addition to cutting corporation tax, which would also be effective.”
Source: The Guardian (02/07) The Sun (02/07)
HMRC error affects 350,000 tax returns
Hundreds of thousands of taxpayers have received incorrect tax returns with an error in their capital gains allowance, with HMRC stating that nearly 350,000 tax returns were affected by the error. According to HMRC, the short tax returns showed capital gains tax exemptions of £400 less than they should have been, based on the 2017-18 CGT figure rather than the 2018-19 allowance. Around 600 individuals with capital gains may have been affected by the mistake, with HMRC confirming that anyone who filled out the capital gains page unnecessarily would not have their tax liability affected.
Source: The Daily Telegraph (28/06)
Gift Aid hits record high of £1.35bn
The total tax relief claimed by charities in the year to the end of March went up to £3.79bn, an increase of £100m, according to new figures from the government. Gift Aid claimed by charities reached a record high of £1.35bn – a near £900m increase on 2017/18. The rise follows a campaign to raise awareness about how the system works following a warning from HMRC that charities were missing out on an estimated £560m of Gift Aid each year.
Source: Third Sector
Political uncertainty hamstrings small businesses
Small firms are struggling to expand, hire and raise productivity as political uncertainty leaves them increasingly hamstrung, according to the latest report from the Federation of Small Businesses (FSB). Nearly three-quarters (72%) are not planning to increase capital investment in their businesses over the coming quarter – the highest level in two years – while just over a third (35%) are finding it difficult to find appropriately skilled staff. FSB national chairman Mike Cherry said: “It’s impossible for small business owners to invest for the future when we don’t know what the future holds. We urgently need to see both prime ministerial candidates spell out their plans for supporting small firms and securing a pro-business Brexit – one that includes a substantial transition period. Fast and loose talk about accepting a chaotic no-deal Brexit in four months’ time is not helpful.”
Source: The Times (02/07)
Hunt: Start a business and I’ll clear your student loan bill
Tory leadership hopeful Jeremy Hunt has promised to wipe student debt for young entrepreneurs who launch their own business after leaving university. The Foreign Secretary wants to increase the proportion of graduates starting their own business – currently just 1% do so – as part of efforts to “turbocharge” the British economy after Brexit. Mr Hunt’s team said the cost to the taxpayer in waiving the debt would be offset by an increase in tax revenues. He has also promised to slash corporation tax and exempt thousands of small companies from business rates.
Source: The Daily Telegraph (27/06)
SMEs under strain from late payment
Research by Xero, the accountancy software firm, and Paypal, the online payments service shows more than one in three owners of small businesses have considered closing their company because of cashflow issues caused by late payments.
Source: The Times (02/07)
FSB concerned over rates pressure
The Federation of Small Businesses has said it is concerned at the large amount of money being collected from small firms after it was revealed that receipts from business rates increased by £900m last year to £25.3bn.
Source: Yorkshire Post (27/06)