The news items on this page will be updated periodically.
Highest earners pay 30% of income tax
HMRC data shows Britain’s highest earners paid 9% more in income tax last year than the year before, handing over £54.3bn. By contrast, people earning less than £150,000 saw their contribution grow by only 1% to £123.3bn. The figure for Britons earning more than £150,000 a year constituted 30% of the overall income tax take of £178bn for the year to the end of March. It follows a cut to the maximum tax-free amount that some high earners can pay into a retirement pot, from £40,000 a year to just £10,000. A Treasury spokesman said: “We've taken more than a million people out of paying income tax altogether since 2015, and 31m people pay less tax thanks to our increases in the tax-free personal allowance.”
Source: Financial Times (02/06/2018) Daily Mail (02/06/2018)
Data regulator will not make example of small businesses over GDPR
The FSB is urging the Information Commissioner's Office (ICO) to show understanding in its enforcement of GDPR, claiming many small firms in the UK are still not ready for the regulation. Information Commissioner Elizabeth Dunham said they would not be expecting "perfection" from small firms from day one.
Source: The Independent (26/05/2018)
Bad debts taking lighter toll
Businesses have reported fewer losses from bad debts in the past 12 months. The findings by Intrum show UK companies on average wrote off 2% of their annual revenue owing to non-payment of debts, down from 4.7% the year before. The survey also found that 24% of British firms cited late payment as a threat to survival, much higher than the European average of 10%.
Source: The Times (29/05/2018)
Top rate no longer just for top 1%
Half a million people will be dragged into the top rate of tax within three years, according to analysis of HMRC data by Saffery Champness. The 45% rate is paid on earnings over £150,000, a threshold which has not changed in seven years. In the current tax year a record 393,000 people will pay the "additional" rate, up 67% on 2011. Mike Hodges, a partner at Saffery Champness, said: "There is an argument for raising the threshold for additional rate tax as it has remained the same for seven years and is no longer a tax on just the 1% […] I don't think people on £150,000 think they're super wealthy - they'd be more likely to think they were comfortable and doing OK.”
Source: The Daily Telegraph (26/05/2018)
Radical overhaul of Isas recommended
The Office of Tax Simplification (OTS) has signalled that it plans a shake-up of Isas with a review recommending making them simpler, more flexible and easier to use. The review suggests removing the ban on partial transfers of money between Isas in the year in which it is invested; removing the restriction on investors taking out more than one type of Isa each year, and making it easier to transfer money from a Help to Buy to a Lifetime Isa (Lisa). The review also says that savings could be exempt from tax for basic-rate tax payers and pensioners. The OTS will also work with HMRC to find ways to stop people being charged high emergency tax rates on the withdrawal of lump sums from their pensions. The FT notes that the OTS report did not consider tax relief on pensions.
Savers remain uncertain over pensions tax relief
HMRC is seeking to appeal a tribunal ruling that found pension savers were entitled to tax relief when they put non-cash assets into a self-invested personal pension (Sipp) or small self-administered scheme (Ssas). HMRC said last year that it would no longer offer pension tax relief on such contributions and most pension providers stopped accepting non-cash contributions. But savers were left uncertain, leading pension provider Sippchoice to bring the case on behalf of a client. Martin Tilley, the director of technical service at Dentons, which owns Sippchoice, says HMRC's position is odd given that the rules allow someone to put a cash lump sum into a Sipp and use that to "buy" some of their non-cash assets, such as a portfolio of shares held in an Isa, and then, once the shares are in the Sipp, to claim tax relief.
Source: The Times (26/05/2018)
Tax crackdown focus shifts to UK firms
Research by Pinsent Masons suggests HMRC is increasingly switching the spotlight of its investigations away from suspected underpaid tax by foreign companies on to UK concerns instead. Data from the Revenue shows it is targeting foreign businesses for just 34% of all suspected underpaid tax - compared with 39% five years ago. By contrast, UK companies are now targeted for 66% of all suspected underpaid tax, up from 61% in 2012. The report also reveals that over the past five years the amount of tax HMRC suspects UK businesses of underpaying has risen 36% to £16.4bn, compared with £12.1bn in 2012. HMRC suspects foreign businesses of £8.4bn in tax underpayments, up just 9% from £7.7bn five years ago.
Source: The Scotsman (29/05/2018)
HMRC fails to answer 4m calls a year
More than four million calls annually to HMRC are going unanswered, with the Revenue conceding the problem is almost twice as bad as previously disclosed. New figures show more than one in 10 callers to HMRC fails to get through to anyone, compared with just over one in 20 a year ago. The true scale of the problem may be even worse, as HMRC’s audit ignores taxpayers who get an engaged tone when they dial the tax advice helpline. HMRC’s own figures also reveal that 14% of calls took more than 10 minutes to answer, though that does not include the time people spend navigating its automated call handling service. The Telegraph’s leader argues that the government should either reverse cuts made to HMRC staff, or take steps to make paying one's taxes easier by cutting down on forms, rules and red tape.
Source: The Daily Telegraph (30/05/2018) The Times (30/05/2018)
Contractor wins IR35 appeal against HMRC
A tribunal judge has dismissed HMRC demands for £26,000 in payment from an IT contractor it claimed had fallen foul of the IR35 tax avoidance rules. The Revenue claimed Ian Wells’ 11-month stint working for the Department for Work and Pensions had been incorrectly classified as an outside IR35 engagement between the two parties. But Judge Jennifer Dean said there are numerous elements to how Mr Wells worked with the DWP that reinforce the fact that he worked for the department as an independent contractor, and not a salaried employee.
Source: Computer Weekly (17/05/2018)
Call to consider relaxing rules for ER
The ATT has called on the government to reconsider the requirement for shareholders to have a minimum stake in a company before they are entitled to favourable rates of tax. Yvette Nunn, Co-chair of ATT’s Technical Steering Group, said: “We think that it may be an appropriate time to consider whether the 5% minimum holding test for shareholders seeking Entrepreneurs’ Relief remains relevant.”
Source: Press Release (17/05/2018)
Small businesses back late payments legislation
A survey of 2,000 small firms by Basware and YouGov reveals 61% of SMEs want new laws on late payments. One in four of the respondents said they have had their financial viability put at risk due to late payment or payment towards the end of a term agreement, suggesting around 665,000 businesses in the UK have come close to bankruptcy because of payment issues.