Chancellor refuses to rule out tax hikes, Business tax roadmap could be a game changer, Equinor says it may reconsider UK investment if taxes rise
THE HOT STORY
Chancellor refuses to rule out tax hikes
Sky News ? The Daily Telegraph ? Daily Mail ?
Chancellor Rachel Reeves has?refused to rule out increasing inheritance and capital gains taxes. She was pressed on whether tax hikes were on the way after Prime Minister Sir Keir Starmer warned that the upcoming Budget will be "painful" as officials look to plug?a ￡22bn “black hole” in the public finances. Reeves refused to deny or confirm which levies - if any - could be adjusted, saying: "I'm not going to write a Budget two months ahead of delivering it." She did, however, say: "We're going to have to make difficult decisions in a range of areas." Reeves told Sky News: “On spending, on welfare and tax, we’re going to have to make a series of decisions," but insisted details will be delivered "in the right and proper way" in the Budget. It has been suggested that Reeves may look to lift the rate of capital gains?tax?so it falls in line with income?tax.?Analysis from the Institute for Fiscal Studies shows that equalising the two could raise ￡16.7bn.
ECONOMY
Investors panic over potential tax hikes
Daily Mail ? Daily Mirror ? The Times ?
Investors have reacted negatively to news of potential tax increases on UK banks, leading to declines in share prices at lenders including Barclays, NatWest and Lloyds. The concerns were ignited by Prime Minister Sir Keir Starmer saying the upcoming Budget would be "painful" and warning that "those with the broadest shoulders should bear the heavier burden." While analysts at Citigroup said a levy on banks "strikes us as somewhat less likely, having been the subject of pushback from the Chancellor pre-election," Dan Coatsworth of AJ Bell observed: "No one is going to shed any tears if the banks are forced to hand over more of their profits," as they have "made big money from higher interest rates, profiting when the rest of the country has struggled through a cost of living crisis." Simon French, chief economist at Panmure Liberum, highlighted the uncertainty surrounding potential tax increases, suggesting that predicting specific sectors for tax hikes is "something of a fool's errand."
Business tax roadmap could be a game changer
Chancellor Rachel Reeves aims to restore "the long-term certainty that has been lacking for too long" with a five-point plan for business, which includes the Budget Responsibility Bill and a business tax roadmap. This roadmap is seen as a potential game changer, offering stability to attract inward investment in the UK. Chris Sanger, UK tax policy leader at EY, says a taxation road map "presents an opportunity to establish a policy governance system that is both exemplary and enviable, motivating private sector capital and boosting the UK's share of jobs, prosperity and?tax?revenues."
Equinor says it may reconsider UK investment if taxes rise
Daily Mail ?
Norwegian energy firm Equinor has said it may reconsider investing in oil and gas in Britain if the government changes the industry's tax regime. Philippe Francois Mathieu, Equinor's head of international operations, said: "We need to look at our appetite to invest further in the UK based on the fiscal regime . . . it could be that the economics are really, really hard impacted." Labour's election manifesto said it would halt new oil and gas exploration licences and hike?the windfall tax by three percentage points.
Mind the tax gap
The UK faces a ￡39.8bn tax gap for 2022/23, with the Treasury missing around 5% of tax?owed. Around 45% of the tax gap is attributed to errors rather than illegal evasion.
CAPITAL GAINS TAX
PM sparks tax raid concern
Daily Mail ?
Amid speculation that the Budget could deliver higher rates of capital gains and inheritance taxes, wealth managers have reported a surge in inquiries from clients concerned about potential sell-offs of shares and properties to mitigate losses. Andy Butcher of wealth manager Raymond James said: "We've had lots of inquiries about how to minimise capital gains tax – and whether it's worth realising gains now and paying capital gains tax ahead of the Budget." With Sir Keir Starmer reiterating a pledge that there would be no hikes to income tax, VAT or National Insurance, Laura Suter of investment platform AJ Bell said the Prime Minister's comments "added fuel to rumours around increases to capital gains tax and inheritance tax."?
CGT raid could hit green investment
Stefano Sommadossi, chief executive of NatPower UK, Britain’s biggest battery storage developer, says concerns that Chancellor Rachel Reeves is planning a raid on capital gains are hitting investment in green power, with firms cautious amid speculation over the levy. Separately, David Durlacher, international chief executive of wealth manager Julius Baer, said an increase in CGT could be the “straw that breaks the camel’s back” for many non-doms and drive them out of the UK.
HMRC
HMRC may be missing out on crypto tax revenue
City AM ?
The UK could be missing out on billions in tax revenue from crypto investors. Research focused on Norwegian tax returns suggests that a large number of crypto investors owe taxes. The report shows that 88% of all Norwegian crypto investors fail to declare their holdings, with each tax-avoiding investor owing on average between ￡151 to ￡821. Across the 6% of Norway’s population who hold crypto, this adds up to between ￡38m and ￡200m. The proportion of the UK population holding crypto is also around 6% and if the rate of unpaid tax is similar, it equates to between ￡500m and ￡2.5bn of lost revenue for HMRC. While the proportion of people in the UK failing to report investments is unknown, HMRC has said that non-compliance could range from 55% to 95%. Crypto investors are required to pay capital gains tax on any profits higher than ￡3,000. In cases where HMRC considers the investments to be trading, they can also be subject to income tax and National Insurance.
HMRC lands ￡3bn from health insurance tax
The Daily Telegraph ?
HMRC has reported a significant increase in Insurance Premium Tax (IPT) receipts, which reached ￡3bn between April and July, marking an 11% rise from the previous year. This surge is attributed to the growing number of patients opting for private health insurance due to NHS delays, with the hospital backlog in England now at 7.6m. RSM?analysis indicates that around 10% of IPT receipts come from adults with private health insurance. RSM estimates that increasing the rate from 12% to 20% would raise around ￡550m in?tax.?
领英推荐
Emile Heskey declared bankrupt after tax woes
Daily Star ?
Former England footballer Emile Heskey has been declared bankrupt following a High Court petition filed by HM Revenue and Customs (HMRC) in January 2024. Once estimated to be worth ￡12m, Heskey's financial troubles stem from an unpaid tax bill exceeding ￡1.64m and legal costs of approximately ￡195k. The Insolvency Service confirms his status as 'currently bankrupt', with the order set to be discharged on August 19, 2025. Heskey's financial difficulties have been exacerbated by his involvement in a celebrity investment scheme linked to a ￡1.6bn tax dispute.
HMRC tax probes into large UK businesses at 5-year low
The number of large businesses under investigation by HMRC for potential tax underpayment has reached a five-year low, with only 790 companies investigated in the 2022/23 tax year.
INCOME TAX
One in five pensioners to pay higher taxes by 2028
The i ?
By 2028, one in five pensioners will face higher tax rates due to the government's frozen thresholds, with approximately 3.1m retirees affected, as revealed by HMRC data obtained by Quilter. Notably, 1.3m of these individuals are aged 70 or over. Additionally, around 400,000 state pensioners on lower incomes may start paying income tax for the first time. Jon Greer, head of retirement policy at Quilter, stated: "The number of pensioners likely to pay higher and additional rates of income tax as a result of frozen thresholds is set to increase exponentially by 2028." Meanwhile, HMRC has confirmed it will not pursue small tax amounts owed by pensioners, arguing that it would not be a good use of public funds. Dennis Reed, of the Silver Voices campaign group, said HMRC needed to clarify what amounts it would pursue. "Is it just 50p? Is it more? They should make this clear," he said.
PENSION TAX
Tax breaks for pensions cost ￡66bn, says report
The Guardian ?
A report from the Fabian Society think-tank shows that tax breaks for pensions cost the government ￡66bn in 2022/23, marking a 55% increase since 2016/17. The think-tank says Chancellor Rachel Reeves could potentially raise ￡10bn annually by reforming pension tax relief, which disproportionately benefits higher earners. The report suggests various reforms, including a flat rate of tax relief and levying National Insurance on employer contributions. Andrew Harrop, the general secretary of the Fabian Society, said: “Pension tax relief is very expensive and very unequal.”?
TOURIST TAX
Edinburgh considers 5% tourist tax
Edinburgh councillors are set to vote on a proposed 5% tourist tax aimed at generating up to ￡50m annually for city improvements. If approved, Edinburgh would become the first city in Scotland to implement such a levy, which would apply to hotels, B&Bs, and short-term rentals like those listed on AirBnB. The funds would also support housing and the arts sector, with 35% allocated to the latter. However, critics, including Leon Thompson from UK Hospitality Scotland, argue that the tax could harm Edinburgh's competitiveness as a tourist destination. The proposal will undergo a 12-week public consultation if passed, with a final decision expected in January 2025 and implementation by July 2026.
WEALTH TAX
Vince: Tax the rich for public pay rise
Dale Vince, a green energy tycoon, has proposed that the wealthy should be taxed to fund public sector wage increases. He argues that the current economic landscape, where "banking bonuses are back with no limit," highlights the need for a fairer tax system, noting that the UK currently has “tax breaks for people who make the most money.” Mr Vince, a?Labour donor, supports above-inflation pay rises to address a decade of real-term salary cuts, which he believes have had "catastrophic consequences" for living standards.?He says there needs to be a “rebalancing on how we do things,” adding that a “change to the tax system would help.”
Unite calls for wealth tax
Unite, the UK’s second-largest trade union, has called for a tax raid on “the super-rich” to ease what?ministers have described as a ￡22bn “black hole” in the public finances. Sharon Graham, the leader of Unite, said: “If we taxed 1% on the wealthiest 1%, the so-called black hole would be gone.” She added: “It’s time for a wealth tax on the super-rich and a tax on excess profits. We don’t need more excuses about fiscal responsibility or talk of wealth creation.”
NON-DOMS
Wealth managers raise concerns over mooted Labour tax proposals
Wealth managers in the UK who cater for non-doms have voiced concerns over Labour’s consideration of increases in capital gains and inheritance tax. David Durlacher, international chief executive of Julius Baer, said an increase in capital gains tax could be the “straw that breaks the camel’s back” for many non-doms. He said: “The impact of (increasing capital gains tax) on investors would be very material and that would have a very punitive impact . . . For a resident non-dom that could prove the tipping point of whether they left or not.” Durlacher added: “The thing that people are most concerned about is not necessarily just what is in the legislation for resident non-doms. It is potentially additional taxes that could come in on top of those . . . There’s a lot of speculation about whether capital gains tax will be increased, or whether inheritance tax will change. Any moves to increase the tax receipts will have a negative impact on a lot of people. For resident non-doms, these sorts of topics could become the straw that breaks the camel’s back.”
INTERNATIONAL
Italy's Supreme Court follows OECD guidelines on comparables
In a landmark ruling, the Italian Supreme Court has determined that the Italian tax authority cannot automatically dismiss comparable entities with low or negative margins when applying the transactional net margin method (TNMM) in transfer pricing cases. The decision, which marks a significant shift in Italy's approach to transfer pricing, acknowledges that "loss-making companies can be valid comparables in certain circumstances." The ruling is expected to influence future tax audits and may set a global precedent, promoting a more flexible application of the OECD Transfer Pricing Guidelines. The case involved Convergys Italy S.R.L., which faced challenges from the tax authority regarding the markup on intragroup services. The court's decision underscores the importance of a nuanced analysis of comparability factors, rather than rigid financial criteria.