Tag Archives: tax

How Brits Are ‘Bracing Themselves’ For The Budget As Rachel Reeves Looks To Raise £40 Billion

Posted on by
Reply

It is not an overstatement to say that this week’s Budget is likely to be the most consequential event of this parliament.

Every decision the government makes between now and the next general election, for good or ill, will be influenced in some way by what Rachel Reeves announces at lunchtime on Wednesday. No pressure then, chancellor.

This is what we know so far. The Budget – called ‘Fixing The Foundations To Deliver Change’ – seeks to raise £40 billion, the vast majority of it through tax rises plus some spending cuts, including £3 billion from the welfare bill.

With Labour having promised not to increase taxes on “working people” before the election, income tax, VAT and the employees’ rate of National Insurance are all off-limits.

That means Reeves has her eyes on inheritance tax, capital gains tax, pension allowances and – most controversially – the employers’ rate of NI to help her balance the books.

A Treasury source told HuffPost UK: “We are dealing with the £22 billion hole in the public finances left by the Tories, and it’s worth stressing that is this year, next year, the year after that and the year after that. It’s a huge problem and we’ve got to address it.

“What we are doing is resetting the public finances and putting them on a firmer footing.

“We’re also acutely aware that we were elected on a platform of change. People voted to change things and for things to get a little bit better. So there will be more money for the NHS to cut waiting lists and more money for long-term investments like building schools, roads and other infrastructure.”

To that end, the chancellor announced on Thursday that she is changing the way the government measures debt, thereby allowing her to borrow an extra £50bn while still sticking to her pledge to bring overall debt down.

That money will be ploughed into public services which, Reeves claims, the Tories were planning to starve of the funds they need.

However, a poll carried out by Savanta and seen by HuffPost UK will make for worrying reading for the chancellor as she puts the finishing touches to her Budget speech in No.11 this weekend.

It shows that 48% of voters believe she should prioritise cutting taxes, compared to 43% who would rather see more money for public services.

However, more than half (55%) say it is more important for the government to invest in public services, with 32% saying it should be cut.

Meanwhile, just 20% of people believe the Budget will have a positive impact, with older people particularly gloomy about what it will mean for them – a result, most likely, of the row over the means testing of the winter fuel allowance.

A total of 80% of of over-55s think it will have a negative impact on their finances, compared to just 6% who believe it will be positive.

Those aged between 18 and 34 are more optimistic, however, with 40% thinking the Budget will be positive for them, with 28% taking the opposite view.

Even Labour supporters appear to be dreading Wednesday, with 41% of those who voted for the party in July believing it will be negative for them, compared to 33% who think it will be positive.

Emma Levin, associate director at Savanta, said: “Significant swathes of the electorate are bracing themselves for Labour’s first budget in 15 years.

“In particular older people appear nervous, amid rumours of many wealth taxes rises, compared to a relatively sanguine younger population.

“Concerningly for Rachel Reeves, even Labour voters think the Budget is going to have a negative impact on their lives. This may be exactly the mood music Labour HQ is going for ahead of a ‘painful budget’, but it’s clear the public want investment in public services as a priority.”

Nevertheless, allies of the chancellor remain confident that the measures announced in the Budget will eventually pay off both economically and politically.

One said: “It will be an honest Budget. Rachel will be very clear that we’re not going to be able to fix 14 years of failure in one Budget.

“This is a 10-year project. She’s having to make difficult decisions now to deliver long-term growth and prosperity.”

With the new Tory leader being announced just three days later, senior Labour figures also see the Budget as effectively the start of the next general election campaign.

“It will set out the clear divide for the whole parliament,” one Treasury source told HuffPost UK.

“Do we either do nothing, stick with the status quo, continue with more austerity, more cuts and more decline, or do we change and do things differently, asking those with the broadest shoulders to pay a bit more tax and start investing in long-term projects?

“This is where it will start to get difficult for the Tories.”

Share Button

Jeremy Hunt’s Claim Tories Always Aim To Lower Taxes Leaves People Pointing Out The Obvious

Posted on by
Reply

Jeremy Hunt told broadcasters this morning that it is an “eternal truth” that Conservative governments “try to bring the tax burden down” – but not many people agree.

The chancellor was speaking to journalists on Sunday ahead of the unveiling of his Spring Budget later this week, an annual event where the government outlines its plans for taxes and spending.

The pressure is on for Hunt and PM Rishi Sunak as Tories have been calling for more popular policies to soften the general public ahead of the general election later this year.

Hunt refused to reveal any particular policies he has lined up before his announcement on Wednesday – but he did repeatedly suggest that the public can trust the Tories with the economy.

He told Sky News: “I do want to show people in an election year that eternal truth that Labour governments spend more and tax more, Conservative governments spend more wisely and try to bring the tax burden down.”

He echoed this claim on the BBC.

“We’ve been very consistent, that we would only cut taxes in a way that was responsible and prudent,” he said, adding that he would not be announcing any “gimmicks” this week.

But, in the last four years, five different Tory chancellors have pledged to bring taxes down – only for them to rise to a historic level.

In fact, the current tax burden in the UK is the highest since World War 2.

As Labour’s shadow chief secretary to the Treasury, Darren Jones, pointed out: “It is the Tories who have raised taxes to their highest level in 70 years.

“No matter what the chancellor does in the Budget this week, working people will be worse off thanks to 14 years of Tory failure.”

Many on X (formerly Twitter), seemed to agree.

And several users pointed out that the last few years in government have hardly improved the economy – especially after former Tory PM Liz Truss’s disastrous mini-budget sent the markets into a complete spin and as the UK is currently in the middle of a recession…

Share Button

Rishi Sunak Earned More Than £2.2 Million Last Year

Posted on by
Reply

Rishi Sunak earned more than £2.2 million in the last financial year, it has emerged.

The prime minister paid the taxman paid £508,308 in tax – a rate of less than 23%.

The figures were revealed in Sunak’s tax return of 2022/23 and confirm his status as one of the country’s richest men.

It takes his total earnings over the last four years to more than £7 million.

Sunak earned £84,119 for being an MP, plus an additional £55,358 as prime minister.

He also received £3,985 in bank interest, plus £289,422 in investment interest and dividends.

The PM’s main source of income came was £1,796,202 in capital gains, meaning he earned £2,229,086 in total.

In all, he paid £163,364 in income tax plus £359,240 in capital gains tax – a total of 508,308.

His income tax rate was 37.7%, while he paid 20% tax on his capital gains. That is an overall tax rate of 22.8%.

Share Button

Judges Make Withering Ruling In Tax Row Over Walkers’ Poppadoms

Posted on by
Reply

Food giant Walkers must pay VAT on its mini poppadoms after judges ruled they are actually more like crisps.

The PepsiCo-owned manufacturer hoped to escape paying the tax on its Sensations Poppadoms because, it argued, they were not made from potato and the product said poppadoms on the packet – meaning they are a food and not a snack that attracts the 20% levy.

But in a win for the taxman, and one that could be costly for the company, a tribunal said they were indeed crisps in all but name since 40% of the ingredients were “potato-derived”.

The judgement, dated January 10, was withering about the name on the packs.

Tribunal judges, Anne Fairpo and Sonia Gable, said: “Nominative determinism is not a characteristic of snack foods: calling a snack food Hula Hoops does not mean that one could twirl that product around one’s midriff, nor is Monster Munch generally reserved as a food for monsters.”

The case has echoes of past battles with HM Revenue and Customs.

McVitie’s successfully argued in the 1990s that Jaffa Cakes are in fact cakes and not biscuits, therefore exempt from VAT.

In 2008, Marks & Spencer won a protracted legal battle on overpaid VAT on its chocolate teacakes, with Europe’s highest court ruling they were cakes and not a biscuit.

Share Button

Liz Truss Wants To Have Another Go At Delivering A Budget

Posted on by
Reply

Former prime minister Liz Truss is to challenge Rishi Sunak and Jeremy Hunt with her own alternative Budget.

Her proposal will be pitched as one that rails against “conventional thinking”, and will be presented to the government as an alternative to the chancellor’s plans.

The report outlining Truss’s suggestions will be released one week before Hunt delivers his autumn statement on 22 November.

Called the “Growth Budget”, her suggestions are expected to propose similar ideas to those she announced while in office, including tax cuts and changes to corporation tax, income tax and national insurance.

It is also expected to include ideas about how the “tourism tax” could be dropped by bringing back VAT-free shopping.

At the Conservative Party conference this month, Truss made a speech calling for tax cuts to “make Britain grow again”.

Truss told the conference that she wanted to see the Conservative Party become the “party of business again”, and for the government to stop “taxing and banning things” and instead “build things and make things.”

Share Button

Keir Starmer Earned £275,000 In The Last Two Years And Paid £118,000 In Tax

Posted on by
Reply

Keir Starmer earned £360,000 in the last two years and paid £118,000 in tax, it has been revealed.

The Labour leader published his returns for 2020/21 and 2021/22 a day after Rishi Sunak became the first prime minister since David Cameron to do so.

They show that in 202/21, Starmer earned £125,695 as an MP and leader of the opposition.

He also received £21,925 in book royalties and £13 in bank interest, making a total of £147,633.

In that year, he paid £51,547 in income tax.

In 2021/22, he earned £126,154 as an MP and Labour leader, £453 in royalties, £14 in bank interest and £85,466 in capital gains after his sister sold a house they had bought together for her and her children to live in.

He paid £43,103 in income tax, plus £23,930 in capital gains tax, making a total of £67,033.

It means that over the two years he earned a total of £359,720 and paid £118,580 to the tax man. That means his tax rate was 33%.

Sunak’s returns showed that he paid HMRC just over £1 million between 2019 and 2022.

Tax returns dating back to Sunak’s time as chancellor show that between 2019/20 and 2021/22, he received £1,006,374 in income, plus £3,760,588 in capital gains – a total of £4,766,962.

On that, he paid income tax and capital gains tax totalling £1,053,060.

A Labour source said: “While Sunak was jacking up everyone else’s tax, he was paying a tax rate of about 22% on millions of pounds of income.”

Share Button

Rishi Sunak Has Earned More Than £4.7 Million In The Last Three Years

Posted on by
Reply

Rishi Sunak earned just under £5 million over the last three years, it has been revealed.

Tax returns dating back to his time as chancellor show that between 2019/20 and 2021/22, he received £1,006,374 in income, plus £3,760,588 in capital gains.

That makes a total of £4,766,962.

On that, he paid income tax and capital gains tax totalling £1,053,060.

A Labour source said: “So while Sunak was jacking up everyone else’s tax, he was paying a tax rate of about 22% on millions of pounds of income.”

Downing Street has been promising to release the PM’s tax returns for months, but eventually chose to do so on the same day that Boris Johnson was giving evidence to the privileges committee and MPs were voting on the Windsor Framework.

That led to suggestions that Number 10 were trying to ensure that it got less media coverage that would ordinarily have been the case.

Share Button

Embarrassment For Rishi Sunak As Wife’s Non-Dom Tax Status Is Revealed

Posted on by
Reply

Rishi Sunak’s wife has non-domicile status, allowing her to avoid paying UK taxes on her overseas earnings.

In a major embarrassment for the chancellor, a spokesperson for Akshata Murty confirmed the arrangement, saying it was a result of her Indian citizenship.

“India does not allow its citizens to hold the citizenship of another country simultaneously,” the spokesperson said.

“So, according to British law, Ms Murty is treated as non-domiciled for UK tax purposes. She has always and will continue to pay UK taxes on all her UK income.”

She has a stake in her billionaire father’s IT services company Infosys, from which she receives a multi-million pound annual dividend.

Labour called on Sunak to reveal how much UK tax Murty’s non-dom status has allowed her to avoid, amid reports that it could run into the millions of pounds.

Tulip Siddiq, shadow economic secretary to the Treasury, said: “The chancellor has imposed tax hike after tax hike on the British people. It is staggering that – at the same time – his family may have been benefitting from tax reduction schemes.

“This is yet another example of the Tories thinking it is one rule for them, another for everyone else.

“Rishi Sunak must now urgently explain how much he and his family have saved on their own tax bill at the same time he was putting taxes up for millions of working families and choosing to leave them £2,620 a year worse off.”

It is understood Sunak declared his wife’s tax status to the Cabinet Office when he first became a minister in 2018.

It is not the first time that Murty’s financial arrangements have been called into question in recent days.

Last week, Keir Starmer urged the chancellor to “come clean” about any links his wife’s family business has with Vladimir Putin.

The Labour leader said it would be wrong for the chancellor’s household to be “benefiting” from any money coming from Russia while the government is imposing sanctions on its regime.

Sunak, who has urged companies to pull out of the country in order to squeeze the Russian economy, has said his wife should not be subjected to political attacks.

The chancellor’s personal popularity has taken a nosedive in recent weeks as the cost of living crisis bites.

Although he cut fuel duty by 5p and raised the threshold at which workers start paying national insurance, he has been accused of failing to do enough to tackle soaring energy bills.

Meanwhile, millions of workers and their employers are braced for a 1.25 percentage point hike in the national insurance bills.

Share Button

Tax ‘Avoiding’ Firms Like Amazon Should Not Benefit From Post-Covid Subsidy, MPs Say

Posted on by
Reply

Amazon and other multinational companies that shift profits to “avoid tax” in the UK should not benefit from Rishi Sunak’s post-Covid super deduction, MPs have said.

Senior Labour MP Dame Margaret Hodge is leading cross-party moves to ensure multinationals that shift profits to lower tax countries do not benefit from the taxpayer subsidy, designed to boost investment as the UK recovers from the coronavirus pandemic.

The super deduction announced by the chancellor in March’s Budget would allow companies to reduce their tax bills by up to 25p for every £1 they invest in plant and machinery, according to the Treasury.

Sunak hopes the 130% super deduction will boost business investment by £20bn a year and contribute to the UK’s economic recovery.

But analysis by campaigners TaxWatch suggests the likes of Amazon could use the super deduction to “entirely wipe out” their UK tax bill, which is already low as the company’s European operations are based in Luxembourg.

Hodge has teamed up with senior Tory MP Andrew Mitchell to propose a cross-party amendment to the finance bill, which will put the super deduction in law. 

She told HuffPost UK her super deduction amendment would ensure “our taxpayers’ money is not used to subsidise companies that deliberately avoid paying UK corporation tax”.

The former minister said: “We just think it is wrong that companies should be eligible for the super deduction scheme if they deliberately create financial structures which have no other purpose than to avoid tax, and if they deliberately export their profits.

“The way in which you can show that is by getting them to report their earnings country-by-country so you can see where the economic activity took place, and therefore where the profits were made, and therefore where they should be taxed.”

ADRIAN DENNIS via Getty Images

A ‘picker’ worker collects items from storage shelves as she collates a customer order inside an Amazon.co.uk fulfillment centre in Hemel Hempstead, north of London, in 2015

She added: “What really riles taxpayers – obviously it riles people that they don’t pay their tax – but what is absolutely unacceptable is that we should then subsidise them further with taxpayers’ money,” she said.

“It is just the pits, and most people think that, and the government should wake up and listen to them.”

The amendment would force large multinationals that want to access super deductions to make public their country-by-country reporting on global activities, profits and taxes.

The government in 2016 accepted a cross-party amendment to force those companies to produce country-by-country reports, but the government at the moment only requires them to be submitted to HM Revenue and Customs, rather than be made public.

Separately, Hodge and Mitchell also want to make it easier to prosecute so-called “enablers” who design tax avoidance schemes. 

Hodge argued that while individuals benefiting from such schemes are punished if they are found to be illegal, those that design them often get away “scot-free”.

She said: “If we start holding those enablers to account then you would much more quickly get rid of these egregious tax avoidance schemes which are constantly marketed.”

Mitchell told HuffPost UK: “We should really be moving towards a position where those who devise and set up these schemes are treated as guilty as those who use them.”

Amazon said it created 10,000 new jobs across the UK last year and has invested more than £23bn in the UK since 2010.

It paid £293m in direct taxes last year, as its sales surged 26% to £13.7bn.

Share Button

Budget 2021: Rishi Sunak Unveils Tax ‘Super Deduction’ For Firms Investing After Covid

Posted on by
Reply

Chancellor Rishi Sunak has unveiled a new “super deduction” for companies investing after the Covid pandemic.

Announcing his budget in the Commons, Sunak said when firms invest, his new policy would see them reduce their tax bill by 130% of the cost.

Sunak also revealed that the government will separately hike corporation tax on the profits of big business from 19% to 25% in April 2023, something which will make him unpopular with some low-tax Tory backbenchers. 

But insisting that the UK will have a “pro-business tax regime” after Covid, he told MPs the new super deduction will unlock investment and specifically reward firms with bold expansion plans in the wake of the pandemic.

Though little detail is yet clear about the new policy, Sunak said in the Commons: “While many businesses are struggling, others have been able to build up significant cash reserves. We need to unlock that investment, we need an investment-led recovery.

Press Association

Chancellor Rishi Sunak will unveil his budget on Wednesday 

“So today I can announce the ‘super deduction’. For the next two years, when companies invest they can reduce their tax bill, not just by a proportion of the cost of that investment, as they do now, or even by 100% of the cost, the so-called full expensing some have called for – with the super deduction they can now reduce their tax bill by 130% of the cost.”

It is forecast to boost business investment by 10%, or around £20 billion extra per year, Sunak said.

Sunak said the corporation tax rise will come in from April 2023 and only apply to 10% of companies. 

Smaller businesses with profits of £50,000 or less will be protected from the hike and will continue paying corporation tax at the current level of 19%, he said.

Sunak said it meant 1.4m business – around 70% of companies – “will be completely unaffected”.

The rise puts the UK above the EU average of 21.7% but remains below the US corporation tax level of 27%, though president Joe Biden has said he is looking to increase.

France’s rate is 26.5%, Germany has a rate at 30%, Canada at 26.5%, Japan at 30.62% and Italy at 24%, according to data from KPMG.

The chancellor also said a new UK Infrastructure Bank will be located in Leeds.

He told MPs: “The bank will invest across the UK in public and private projects to finance the green industrial revolution.”.

Share Button