BVCA reaches out to Labour on carried interest, Budget Responsibility Bill clears the Commons, IPPR: Tax reform could ease regional inequalities
THE HOT STORY
BVCA reaches out to Labour on carried interest
The private equity?industry?is looking to improve relations with the Labour government as the sector prepares for reform of the carried interest regime. Michael Moore, chief executive of the British Private Equity & Venture Capital Association, has written to the Treasury suggesting that a plan to require dealmakers to invest their own money in funds in order to qualify for a lower tax rate may work, but any changes?should not be applied to funds already in operation because that might be viewed as a form of retrospective taxation. Labour could hike the tax rate for carried interest from the current level of 28% to 45%, a move many fear would drive dealmakers abroad. The BVCA is calling for close cooperation if Labour introduces a co-investment rule and urges flexibility for new managers or those from diverse backgrounds who may not have the funds to make personal investments.
ECONOMY
Budget Responsibility Bill clears the Commons
London Evening Standard ?
The Budget Responsibility Bill has successfully passed through the Commons, establishing a “fiscal lock” that mandates the government to consult the independent Office for Budget Responsibility (OBR) before implementing significant tax and spending changes. Treasury chief secretary Darren Jones said: “Every fiscally-significant change to tax and spending will be subject to scrutiny by the independent OBR.” The legislation aims to enhance the OBR's role and ensure that the government adheres to its fiscal mandate, thereby promoting sustained economic growth. However, opposition members, including shadow Treasury minister Nigel Huddleston, expressed concerns that the government may alter fiscal rules at the upcoming Budget, potentially undermining the Bill's intent.
IPPR: Tax reform could ease regional inequalities
The Daily Telegraph ? City AM ? Daily Express ? Daily Mail ?
Labour is being urged to implement an ￡18bn tax reform aimed at addressing wealth inequality as Chancellor Rachel Reeves prepares for her first Budget. The Institute for Public Policy Research (IPPR) suggests that the current tax system favours wealth over work, saying: "The tax system's bias towards wealth is one of the most significant barriers to levelling up that we face." IPPR analysis shows that around 40% of investment income in the UK is generated in London and the South East, despite those areas being home to a just quarter of the UK's population. The IPPR's report,?which aims to address the growing regional inequalities exacerbated by the current tax structure, suggests equalising capital gains tax with income tax to raise ￡68bn before the next general election in 2029. It also recommends a unified tax schedule for all income types and reforms to property tax, including replacing council tax with a proportional property tax. George Dibb, the IPPR’s associate director for economic policy, said: “Right now, the UK’s tax system is skewed, holding back attempts to reduce regional economic inequalities and benefiting a lucky few who largely get their income from wealth, not work.”
Budget will be painful, PM warns
Sky News ? BBC News ? Financial Times ? The Independent ? The Guardian ?
Sir Keir Starmer has warned that Budget will be "painful," saying people will have to "accept short-term pain for long-term good." While he did not offer details, the Prime Minister said those with the "broadest shoulders should bear the heavier burden." Sir Keir accused the Conservatives of creating a ￡22bn black hole in the public finances, adding that Labour had inherited "not just an economic black hole but a societal black hole" from the Tory government. While Starmer repeated a pledge that Labour will not raise income tax, National Insurance or VAT, Chancellor Rachel Reeves has not ruled out an increase in inheritance tax, capital gains tax, or reforming tax relief on pensions.
CORPORATE
North Sea investment will be driven abroad by high taxes
The Times ? Daily Mail ? The Daily Telegraph ? The Guardian ?
Labour's proposed tax increases on UK oil and gas companies could lead to a significant decline in investment, costing the country ￡13bn, according to Offshore Energies UK (OEUK). The report indicates that capital investment could plummet from ￡14bn to ￡2.3bn between 2025 and 2029, resulting in a "reduction of ￡13bn in the total economic value of the sector." The new tax regime, which includes a 78% tax on profits, is the highest in any UK sector. David Whitehouse, OEUK chief executive, stated: "Our analysis shows that its policy will ultimately reduce this sector's contribution to the UK economy." With major operators like Equinor warning of potential withdrawal from the North Sea, the future of UK oil production, which has already fallen to an all-time low, appears increasingly precarious, says the Telegraph’s Jonathan Leake.
Reeves pledges to cap corporation tax at 25%
The i ?
Chancellor Rachel Reeves has said that corporation tax will be capped at 25% as part of a "tax roadmap for business" to be detailed in the upcoming autumn Budget. During Treasury questions, Reeves said: "It is vital also that the?tax?system supports growth. I can confirm that at the Budget the government will be outlining a?tax?roadmap for business to offer the certainty that encourages investment and gives business the confidence to grow, including our commitment to cap corporation?tax?at 25% for the duration of this Parliament."
CBI: Tax roadmap could boost confidence
City AM ?
The Confederation of British Industry (CBI) has urged the government to publish a long-term tax roadmap to alleviate a “confidence shortfall” among UK firms. With the CBI saying firms are facing “cost pressures” and “middling conditions” - and are in need of a “major boost to confidence” - the CBI's interim deputy chief economist, Alpesh Paleja, said: “Delivering certainty about the tax and regulatory environment could really help to address that shortfall.”
Jersey lawmakers mull multinational tax deal
BBC News ?
The government of Jersey is reviewing a new tax regime that would impose a 15% minimum corporate income tax on multinational companies, as part of the Organisation for Economic Cooperation and Development (OECD) Pillar Two initiative. This initiative aims to establish a global minimum tax rate, targeting companies with global annual revenues of €750m (￡631m) or more. Deputy Jonathan Renouf, chairman of the OECD Pillar Two implementation sub-panel, remarked: "I think you would struggle to find a more significant change in taxation in Jersey within decades." The draft law is set to be debated by the States Assembly on 1 October, while most companies in Jersey will continue to benefit from the existing zero-ten rule.
Tougher tax on banks could raise ￡14bn
Daily Mail ?
Britain's major banks could be facing a windfall tax as ministers look to address a ￡22bn gap in public finances. Analysis by campaign group Positive Money suggests that a 35%?tax?on the ￡44.3bn pre-tax profits reported by HSBC, Barclays, Lloyds and NatWest in 2023 would raise ￡14bn.?
IR35
Sky Sports pundit ordered to pay ￡700,000 to HMRC
Daily Mail ?
Stuart Barnes, the Sky Sports rugby pundit, has been ordered to pay ￡700,000 in tax after a tribunal ruled he underpaid between 2013 and 2019. Despite winning a previous case against HMRC at the First Tier Tribunal, the Upper Tribunal overturned that decision, stating he should have been paying employment tax during his time at Sky. The tribunal concluded that Barnes was not taking on financial risk, as Sky held the exclusive contract for his services. Dave Chaplin, from consultancy IR35 Shield, said: “This case underscores the need for freelancers and their clients to ensure that their contracts and working practices accurately reflect the true nature of their relationship.”
CAPITAL GAINS TAX
Wealthy flee as tax hikes loom
Daily Mail ?
Amid speculation that Labour is preparing to implement significant tax increases in its upcoming Budget, a record number of wealthy Britons are contemplating leaving the UK. Advisers have reported a surge in inquiries from high-net-worth families seeking to protect their assets, with predictions of a net loss of 9,500 millionaires in 2024, according to Henley & Partners. Concerns are mounting over potential hikes in capital gains tax and inheritance tax, prompting many to consider relocating to countries with more favourable tax regimes. David Lesperance, the founder of?tax?and immigration advisory Lesperance and Partners, said wealthy clients "have been looking anxiously at the exit door" since the Chancellor "started talking about a 'fiscal black hole'," adding that the Prime Minister's warnings about a "painful" Budget "just reaffirms their concerns that major IHT and capital gains hits will be coming soon."
领英推荐
High earners leave over CGT fears
The Independent UK ?
It’s the turn of the Independent to report on how concerns over a potential increase in capital gains tax (CGT) in the upcoming Autumn Budget are prompting wealthy individuals and entrepreneurs to leave the UK or sell their assets. Chancellor Rachel Reeves has not ruled out a CGT hike, which currently ranges from 10% to 28%. Tom Adcock, a former HMRC tax inspector, noted: “Just the prospect of CGT rising significantly from 30 October is driving behaviour,” as clients rush to complete transactions before any changes. Business owners are considering relocating to countries with more favourable tax regimes, such as Spain and Ireland, where gains on non-local assets are not taxed. Stefan Fielding, tax director at Sapphire, suggested a significant increase in CGT could lead to wealthy individuals establishing residency abroad.
Landlords fear tax hit
Daily Mail ?
Industry experts warn that a potential rise in capital gains tax (CGT) could severely impact private landlords already burdened by high costs and regulations. The government is said to be considering aligning CGT rates with income tax, potentially raising the upper band to 45%. This has prompted a number of landlords to sell properties before the anticipated changes take effect, with financial advisers predicting a significant disruption in the rental market. Patricia McGirr, founder of the Repossession Rescue Network, warns that the proposed tax hikes could lead to a flood of properties on the market, driving down prices and destabilising the housing sector.
Private equity warns UK capital gains tax overhaul could be ‘tipping point’
Financial Times ?
Private equity executives have warned radical action to overhaul the UK’s capital gains tax regime could prove pivotal in sparking an exodus of dealmakers from Britain.
Higher UK taxes will deter risk-takers, warn tech groups
Venture capitalists and entrepreneurs warn that the Labour government’s signal that it will raise capital gains tax and tighten the tax treatment of carried interest risks stifling the UK’s technology industry.
NON-DOMS
Non-dom tax overhaul could backfire
The Daily Telegraph ?
The government's proposed overhaul of the non-dom tax regime could lead to a loss of ￡1bn, according to research by Oxford Economics. The current system allows wealthy foreigners to avoid paying tax on overseas income for up to 15 years, but this will change in April 2025 to a residence-based regime with a four-year limit. The Office for Budget Responsibility initially estimated that scrapping the tax break could generate ￡3bn annually, but this is uncertain due to potential non-dom departures. Oxford Economics predicts a 32% drop in the non-dom population, and Chris Etherington from RSM warns that "the Chancellor could find her financial forecasts are built on sand if we see large numbers of non-doms leaving the UK." In 2022-23, non-doms contributed ￡8.9bn in taxes.
HMRC
HMRC to allow fractional shares in Isas ahead of rule change
The UK tax office has ended a ban on investors holding portions of shares in tax-free Individual Savings Accounts. The move comes after Labour confirmed it would proceed with legislation proposed by the Tories allowing fractional shares to be held in tax-free savings accounts. It is hoped the change will provide an overall boost in demand for shares, allowing the less wealthy to invest in expensive stocks. HMRC said in a statement: “The government has committed to changing the Isa?rules to allow certain fractional shares. Taking a pragmatic approach, we will not raise an assessment on managers or investors for fractional shares acquired before these changes are made.”?
WEALTH TAX
Union wants wealth tax to fund public sector pay rises
The Daily Telegraph ?
Unite, Labour's largest union supporter, is urging Chancellor Rachel Reeves to implement a wealth tax on the richest 1% to fund a ￡25bn annual pay rise for public sector workers. Ahead of the Chancellor's first Budget, the motion will be discussed at the Trades Union Congress. The Accord union has also called capital gains tax to be aligned with income tax and and National Insurance to be extend. Reeves has suggested that tax?rises will be required to tackle a ￡22bn black hole in the public finances and it is believed she could opt to close inheritance tax?loopholes and align capital gains?tax?rates with those of income?tax.??
Dan Neidle: ‘A UK wealth tax wouldn’t work’
Dan Neidle, the founder of Tax Policy Associates, explains in an FT podcast why wealth taxes are unserious “political showboating” and the Chancellor should focus instead on tax simplification and economic growth.
INHERITANCE TAX
Inheritance tax: how to prepare for the Great Wealth Transfer
Expectation is growing that inheritance tax could be part of upcoming UK tax reforms. But?regardless of any Budget changes, the FT says the principles will probably remain the same.
TOURIST TAX
End of tax-free shopping for tourists is ‘hitting Britain hard’
The chief executive of Kurt Geiger has added his voice to those calling for the reintroduction of VAT-free shopping for tourists. Neil Clifford said the current situation is having a “massively negative effect” on spending in Britain. He said people were travelling to other countries in Europe to go shopping after the VAT retail export scheme was withdrawn in Britain in 2021 following Brexit.?
STAMP DUTY
Cleverly proposes scrapping of stamp duty
Conservative leadership contender James Cleverly has proposed the complete abolition of stamp duty on residential properties. In an article for The Telegraph, he stated: "It's a bad tax that is stopping too many people getting on the housing ladder." Currently, stamp duty applies to homes over ￡250,000, with first-time buyers facing a threshold of ￡425,000. Cleverly's ambition aims to facilitate market movement by removing barriers for both older individuals looking to downsize and young families wanting to upsize. His proposal comes amid expectations of "painful" tax increases from the Labour government in the upcoming October Budget.