Either way, this new currency is becoming quite the thing for web-crusties who look at it like it is our saviour from the banks, despite having to shut down recently, thanks to a massive loss. In Britain, it is all set to grow as HMRC rules that they’re not at all interested in charging VAT on Bitcoin transactions.
The Tax People held talks with UK Bitcoin traders last week and decided that they would not charge the 20 per cent VAT tax on trades, and, on top of that, wouldn’t be charging the tax on entrepreneurs’ Bitcoin margins either.
Suddenly, shark-eyed business sorts are thinking of getting on-board with the Hippie Money now that Britain will be one of the most tax-friendly places for this cryptocurrency. And they’re right to keep an eye on it. At the moment, there’s around $6.9bn worth of Bitcoins in circulation.
As Bitcoins are not traceable, this could be an excellent area for criminals and tax-dodgers to get involved in. Your dealer might start dealing solely in Bitcoins. Vodafone and Chris Moyles might start getting on it too.
Jonathan Harrison, someone looking to bring Bitcoin ATMs to the UK, thinks this is good news, saying: “If they had added VAT that would have destroyed us, there would have been no point in starting this business at all. It’s great that the UK authorities are seeing Bitcoin as an innovative technology that can help the economy.”
Is this the money of the future? We all know how well the babyboomer hippies did when it came to making money, don’t we?
Few of us actually like paying our taxes, but most of us have little choice in the matter when it is deducted from our salaries before we even get paid. However, it might ease the bitter pill to discover that many of us are actually better off because we pay taxes.
Confused? The answer lies in the net benefits to taxpayers, and accountants Smith and Williamson have concluded that the cut-off point at which you receive less than you contribute is actually higher than you might have thought, and falls on gross household incomes of around £35,000 to £38,000. Anyone earning less than this is, theoretically at least, quids in.
The point at which a household switches from being an overall ‘taker’ to a ‘giver’ is where disposable income, passes a threshold of about £27,000 net. At that point a household is receiving benefits (not just cash benefits, but includes societal benefits such as average usage of school and the NHS) and paying taxes to the extent that the two cancel each other out. If a household earns more than this tipping point, it is a ‘giver’ and pays more in taxes than it receives. If the household earns less, they get more than they pay out, a ‘taker’.
Although Smith and Williamson stress that numerous factors are involved, and dependent on individual circumstances, take the following example of a household with a gross income of £39,000. Just over the break-even, the household would enjoy benefits quantified at just under £12,000, but would be required to contribute almost £13,000 in various taxes, making it a net ‘giver’ by around £1,000.
The calculations showed that, actually, most of us are takers rather than givers. The top 40% of households by earnings are carrying the lower-earning 60%. This is supported by Institute for Fiscal Studies (IFS) figures that suggest 300,000 very high earners, out of about 30 million income tax payers, paid 30% of all income tax. It said that over a period the income tax burden had been pushed increasingly on to this narrow band of top earners- in 1980 the top 1pc of earners paid 11% of all income tax.
At the same time, the number of taxpayers is falling, in part owing to rising personal allowances taking the lowest earners out of tax- between the tax years 2011-12 and 2013-14, the number of income tax payers has dropped by 900,000 to 29.9 million. HMRC has also commented that receipts from higher earners are less predictable, partly because wealthy people can easily emigrate to a more tax-favourable jurisdiction.
So are you a giver or a taker? And which would you rather be- a household with less cash, but getting more out of the deal, or one with more cash, part of which you have to share with 60% of the population…
Recently, HMRC announced that, to try and combat tax avoidance, they would start asking for contested tax up front while they decided whether the tax would end up being payable or not. Simple idea but possibly not-to-easy to enforce. We think HMRC are going about this all the wrong way. They need to take a leaf out of the books of an increasing number of tax authorities around the world and offer us, the people, high-end incentives to shop those not paying tax.
Portugal is the latest country to announce a ‘tax lottery’, where ordinary citizens can win a luxury car (unofficial estimated cost to the Portguese taxpayer, €90,000 each) simply by asking for a receipt for a cup of coffee or a haircut.
The black market in Portugal is, described as problematic (at almost a fifth of total output), with a great number of traders not registering with the tax authorities, and therefore never paying any tax. By incentivising customers to ask for an official receipt, complete with tax registration number, Portuguese revenue officials are confident the increase in receipts will more than outweigh the cost of the 60 cars a year being offered as prizes from April.
Tax experts say the measure is designed to appeal to Portugal’s penchant for gambling – the country is one of the biggest spenders per capita on EuroMillions, and to the social prestige attached to expensive cars. The fast lane on Portuguese motorways is sometimes nicknamed the “Mercedes lane”.
However, “If someone needs a plumber or an electrician, I suspect they’ll still be attracted by the discount resulting from not being charged VAT,” said John Duggan, a Portugal-based tax adviser, talking to the FT. “They’d be able to buy a lot of ordinary lottery tickets with the money they save,” he added sagely, charging €200 for this advice*
The idea is new to Portugal, but is not new around the world. A similar lottery run in the state of São Paulo in Brazil provided Portuguese inspiration and comparable schemes are used in Argentina, Colombia, Puerto Rico and Taiwan. It isn’t even the first such scheme in Europe, with Slovakia’s version offering cash and cars in a tax lottery being run sucessfully since last year.
So could we see National-Lottery-Style adverts from HMRC in future? It could be you driving a nice car for shopping your mechanic to the taxman. Better hope it doesn’t break down…
*not really. This is an accountant joke.
The Government, in their infinite wisdom, have cut the tax bills of loads of our biggest companies by around a quarter in 2013. Politicians think this will cut our debts. Everyone else thinks this is an example of a two-tier rule book.
While companies like Google and Apple make insane amounts of cash, they pay very little tax in the UK, and a group surveyed (which includes some of the biggest UK companies) said their corporation tax bills fell 26%, on top of hefty drops in previous years.
David Cameron has said that this is a bid to encourage businesses to come over here and invest and create jobs.
The 100 Group, including most businesses that appear on the FTSE 100 Index of major businesses, had a tax bill of £6 billion pounds in a survey conducted by PricewaterhouseCoopers (PwC). The 100 Group’s tax bill has steadily dropped since 2006, when members paid £12.6 billion in corporation tax.
A spokeswoman for the finance ministry said: ”Our major corporation tax reforms, part of the government’s long-term economic plan, are supporting jobs, growth and investment, and playing a critical part in delivering a sustainable economic recovery.”
Does that make you feel better?
We know you all like a drink, but the latest news from Asda is set to shock oenophiles to the core. No more 3 for £10 wine.
Speaking to Off Licence News, which is a real publication (since 1863), wines and spirits category manager Tracy Ford has said that Asda has “permanently dropped” the popular promotion, described as “central to the retailer’s strategy”. She said:
“Two to three years ago, customer participation with three-for-£10 was really high but with all the work we’re doing to educate consumers and expand the ranges, that has decreased.”
“Also the quality of the wine had decreased because of duty and we felt the time was right to move away,” she finished. Given that £2.94 out of a £5 bottle goes on taxes and duty, an average bottle contains an estimated 20p of wine, after transport, storage and supermarket profit costs. At £3.33 a bottle retail, you’re drinking the grapes left between someone’s toes.
Ford claims that Asda attempted to do away with 3 for £10 in three years ago, but were forced to reinstate it after customer complaints, as Asda “didn’t give consumers an alternative.” Now, however, Asda have a new plan to keep their customers slightly squiffy. Cheap wine.
Yes, Asda’s new strategy is to introduce “a new portfolio of wines priced at £3, £3.50 and £4 to fill the gap”. We’re no mathematicians, but even we can work out that three bottles of £3 wine works out at £9. Last time we checked that was less than a tenner.
Obviously not that fussed about the quality then…
Don’t get caught by copycat websites- especially when filing your Self Assessment return by 31 JanuaryJanuary 13th, 2014 • 5 Comments
If there’s one thing the new year hasn’t seen the back of, it’s scams, and the most recent scam-a-la-mode is the copycat website scam.
Scam sites can cover anything, but their weapon of choice tends to be governmental type document completion, ideally where there is a fee to be paid. Recent scam sites found included provisional driving licence, European health cards and passports as well as congestion charge and even self-assessment tax return sites.
Last week, the Advertising Standards Authority upheld a complaint against paylondoncongestion.co.uk, which charges drivers a premium for paying the London Congestion Charge- costing £16 instead of £10 for driving into London, or £20 instead of £12 to pay the next day. However, paylondoncongestion.co.uk has declined to take any notice whatsoever of the ASA ruling.
The ASA told This is Money: “In 99 per cent of cases, advertisers comply immediately. But in this instance, Paylondoncongestion has not. We are disappointed. The website still does not make it clear that it is unofficial”. Unfortunately, many of the other tools at the ASA’s disposal do not hit scurrilous companies where it hurts- in the bottom line- with ‘naming and shaming’ the firm or paying for ASA adverts to appear in internet searches alongside those of the scam website to warn potential users away, not likely to be as effective as a fine. The ASA do have redress to the Trading Standards Institute who can take statutory action and issue fines, but by that time, the tricksters are likely to have disappeared back into the woodwork.
But some claim that much of the problem could be easily solved by search engines. If scam websites didn’t appear above the official site, far fewer people would be tricked into spending more than they need to, or even losing money altogether- and some think the likes of Google should act.
Mike Walker googled “hmrc” to file his tax return. He clicked on the top result, taxreturngateway.com, and realised too late that it was not the official government site. He told The Guardian: ”It looked very similar, but it was only once I’d gone through the process of filing my return and made a payment of £400 that I realised it wasn’t the same.”
However, while the site has clearly paid for its premium position above the organic results, is it, or Google, breaking any laws? Taxreturngateway.com clearly states on its home page that “We are not connected to or affiliated with HMRC, DWP or any other official government body. We offer a bespoke, value for money, tax return assistance service for which we levy a charge.” They highlight that HMRC filing is free and even have a link back to the HMRC site. They claim they are providing a tax return completion service, for a fee, and it’s not their fault if people can’t read properly. Caveat emptor and all that jazz.
Google reportedly removed taxreturngateway.com from its advertising spots last month, but reinstated the site after investigating complaints.
So what do you think? Are people caught by these scams just victims of an online version of survival of the fittest or should someone somewhere take some action to stop them? Preferably with a few more teeth than the ASA.
Oh, and don’t forget to file your tax return online with HMRC by 31 January 2014.
Gorgeous George has been in the news again recently, spouting off about further cuts to public service budgets and just how much the National Minimum Wage should increase (over the current £6.31 for those 21+). However, what he has remained tight-lipped about, is whether he has heeded pleas to adjust the duty on wines and spirits in a similar way to beer.
While January is never the best month to think about drinking, and with record numbers becoming charitable dryathletes, perhaps George could be forgiven for ignoring the recent campaigns. However, it seems that, owing to one particular tipple, the Treasury might consider making an exception.
Economic secretary Nicky Morgan stated that the government will ‘look at’ the duty escalator on spirits during a Westminster debate on how whisky sales in the UK have been squeezed by 12% in the last five years because of high taxation- if the escalator escalates as planned, over 80% of a bottle will be duty. Which doesn’t leave much room for the alcohol.
While looking at is not necessarily the same as taking action, Ms Morgan said: “I can give an assurance that I will give this very serious consideration in the run up to the Budget, and I certainly will discuss it with my colleagues in the Treasury, including my right honourable friend the Chancellor of the Exchequer.”
Many are speculating that a Budget announcement of a cut in duty would be opportune, likely to come six months before a referendum on Scottish independence and that cheaper whisky could be just one of a number of measures aimed at boosting Scotland and supporting the No campaign.
And it seems there is growing parliamentary support for cutting spirit duty, or possibly just whisky duty- Chief Treasury Secretary Danny Alexander and Scottish Secretary Alistair Carmichael both have distilleries in their constituencies and have campaigned for fairer tax on whisky in the past. Alan Reid, Lib Dem MP for Argyll and Bute, said: “It is very unfair that whisky is taxed far higher than beer and wine. We must be about the only country in the world that taxes our own product higher than imported products like wine.”
So what do you think? Is a whisky-driven duty drop going to convince hard line separatists that Westminster isn’t so bad after all, or don’t you care what the Scots do, so long as your gin is a bit cheaper?
People give all manner of reasons for not handing a tax return in on-time, and HM Revenue & Customs has heard them all. And now, with a tax return deadline imminent, they thought they’d share the daftest reason for people’s tardiness.
Goldfish dying and woman too stunned after seeing a volcano go off on the news got onto the top ten of the most ‘bizarre and flimsy’ excuses and each one was met with a £100 fine from HMRC officials.
Others include a thespian from Coventry who said he was too busy touring the country with his one-man play while elsewhere, a taxi driver with a bad back would’ve done his return but he had a bad back and wasn’t able to clamber upstairs to get his tax return form. One corker was the man on a world cruise in his yacht who basically said they don’t have postboxes on the sea.
The best was a London accountant who told inspectors that he had been too busy submitting his clients’ tax returns to file his own.
HMRC’s head of personal tax, Ruth Owen, said: ‘There will always be unforeseen events that mean a taxpayer could not file their tax return on time. However, your pet goldfish passing away isn’t one of them.”
Fill out a self-assessment return for the 2012/13 tax year before the January 31st if you want to avoid a fine and if you’re struggling, have a look at www.hmrc.gov.uk/sa or call the self-assessment helpline on 0300 200 3310.
The European Banking Authority (EBA) have followed the Banks of France and China in deciding to tell people that Bitcoins (and other virtual currencies) are a Very Bad Idea indeed, garnering no protection from the likes of the EBA in case of loss or theft. The EBA shook it’s head mournfully and said there was no protection or compensation for people whose “digital wallets” are hacked, a transfer of virtual money goes wrong or a platform is shut, as happens frequently as new currencies come and go.
While the EBA stopped just short of telling consumers straight out not to use online currency markets, it warned that customers who end up out of pocket won’t benefit from a banking safety net like the compensation given to deposit holders when a mainstream EU bank goes bust. Just like in Cyprus and Spain…
“Currently, no specific regulatory protections exist in the EU that would protect consumers from financial losses if a platform that exchanges or holds virtual currencies fails or goes out of business,” EBA said in a statement.
“Cases have been reported of consumers losing significant amounts of virtual currency, with little prospect of having it returned. Also, when using virtual currency for commercial transactions, consumers are not protected by any refund rights under EU law.”
There are about 100 virtual currencies, with new ones appearing every five minutes. Bitcoin is by far the best known and their value topped $1,000 (£1,630) last month. And we’ve all heard the tale of the bloke who chucked his Bitcoins not knowing their worth.
The EBA is currently considering whether it feels virtual currencies can or ought to be regulated. It could go so far as to to ban them, using its current powers, although whether this could actually be achieved in practice is another matter. Bitcoin sellers might just set up on street corners, hawking their products to impressionable young teens…
But for some, Bitcoins are a way to make (serious) money- someone who obtained Bitcoins while they were free, or at the cost of a few pennies, is now sitting on a sizeable nest egg. Not that the EBA can be happy for these people either- it warns that these people could be facing hefty tax bills.
The tax treatment of Bitcoins is as-yet undecided across Europe, with much of the debate surrounding whether the virtual currency is classed as a currency or a digital product or a voucher for cash. In the UK, currency is chargeable to capital gains tax, but exempt from VAT; if the Bitcoin is an intangible asset it is still chargeable to capital gains tax on the profit, but not necessarily liable for VAT.
Last month, HMRC were on record as stating that Bitcoins are vouchers, not currency, and those who trade in them could be liable for 20% VAT; however, following representation from various bodies, and complaints by Bitcoins traders who threatened to move their Bitcoin trading offshore, HMRC have now apparently agreed that VAT probably isn’t due after all. But they might change their mind again. Your guess is as good as mine.
Last week, the Chancellor’s Autumn Statement was full of Good News about how well we are doing with the economy and how completely smashing George’s recovery plan has been. However, it seems that the general populace, the voters, are less impressed with Mr Osborne, with more than four in ten of us (41%) believing last week’s announcements will leave us worse off.
And that’s one of the better scores for the Chancellor. A survey of almost 4,000 people by USwitch.com found that almost two thirds of us (65%) are concerned about the country’s finances after the announcements, with 56% saying the same about their own financial circumstances following the Autumn Statement.
But we are also worried about what was not included in the Statement. When asked about issues not tackled by the Chancellor, three quarters of us (74%) felt care for the elderly should have been dealt with, along with payday loans (61%) and low savings rates (56%).
Unsurprisingly, the Chancellor’s big ticket item, the change in State Pension age, has not been popular, with almost six in ten people (59%) opposed to the change. Most of us (73%) think the Chancellor does not understand the financial fears of ordinary people and almost as many (69%) don’t trust the Government to make the best decisions for our financial future. Looking good for the 2015 election there, George.
Michael Ossei, personal finance expert at uSwitch.com, says: “The Autumn Statement has left most consumers deflated. The focus on the economy might be good for the financial health of the nation, but it has left individuals still feeling under the weather. The recovery is yet to reach their finances.”
“Increasing the retirement age so that many will now have to work until they are 70 was never going to win any friends even though most people understand the reasoning behind it. For existing pensioners, a rise of £2.95 a week to the state pension simply isn’t enough to help them cope with the spiralling cost of living. Even today another energy supplier has announced a price hike, which will eat into this small increase,” he finished.
So what do you think? Are you one of the 41% of people who are happy with the State Pension age increase (and is that because you escape its effects?), or are there other measures you think will adversely impact on your personal finances? Surely there was some Christmas cheer, with the freeze in fuel duty if nothing else?
Remember the days when we used to just have one Budget a year? Of course, the Autumn Statement under the coalition is very definitely not a mini-budget (according to them)- although a number of tax and benefit measures were announced. So what are the main ones, and how do they affect you?
Pensions and benefits
Leaked before the actual statement, the Chancellor announced that the State Pension age will be increasing sooner than previously advised, with a minimum age of 68 by the mid 2030s and 69 by the late 2040s. If you have children now, they won’t be able to retire until they are 101.
This means that anyone younger than mid-forties is looking at an increase in retirement age, to keep pensions in line with the latest life expectancy projections, apparently. George did not, however, address the issue of the wildly different life expectancies (figures from the ONS) depending on where in the country you live…
State pension and jobseekers benefits will also be excluded from the welfare spending cap- where the Government is going to tighten the welfare purse strings and allow the lower classes to fight it out amongst themselves for a share of the pot. And heaven help you if you become incapacitated at the end of the financial year, when it’s all been spent.
Cars and fuel
Another pre-announcement was the scrapping of tax discs for cars. Unfortunately this does not mean the Road Fund Licence is being scrapped, merely the perforated circle of paper attached to your windscreen. From 2015 the system will be completely online (most evaders are currently caught through number plate recognition rather than inspection of said perforated circle) and drivers will be able to pay for the disc monthly through direct debit, rather than 6 or 12 monthly as at present. The current rates for 6 month licences are around 10% higher than the annual disc- both this and the direct debit option should come in cheaper from 2015 with a 5% premium instead.
The next fuel duty rise has also been scrapped. After all the Government cares deeply about “hard-working families”.
On top of the personal allowance rising to £10,000 from April, the one policy the Lib Dems have actually managed to get through, the Autumn Statement confirmed some family-friendly measures that have already been wafted about.
The transferable married couple (or civilly partnered couple) allowance will become a reality, but only for those households where one member does not work, or works very little, earning £9,000 or less a year. Up to £1,000 of personal allowance can be transferred to a spouse, saving 20% in tax (£200 a year).
For those with small children, after reading a report by two posh foodies, the Government has also decided to introduce free school meals for every infant school age child (4-7) in years Reception to year 2 starting from next September. Junior children can fend for themselves.
At an average cost of around £2 per day, that equates to a fairly impressive £390 a year saving for parents. Of course, parents will be free to choose whether their child takes free dinners or whether they would rather send sandwiches, at least for now- the report the Government are acting on actually advised that sandwiches were so evil, they should be banned from schools altogether. Presumably along with all children with food allergies and other dietary requirements that would mean they can’t eat State-approved food…
The High Street
Even the Government has noticed that the High Street is suffering somewhat, and has announced a raft of business rates measures aimed at rejuvenating the shops near you. Discounts, £1,000 reduction in bills and reoccupation relief might mean that you see some new shops offering keen prices to compete with the not-cold-and-windy option of shopping online.
But watch out, you might be more likely to be served by a spotty teenager. A new concession for workers under 21 will save employers national insurance for these workers- up to £1,000 per worker earning £16,000- making them much cheaper to employ than those ancient 21 year olds.
There were lots of other figures in the Autumn Statement- some changes to capital gains tax rules on residential properties, and lots and lots of new figures showing how the last figures were all wrong. The new figures clearly show what A Grand Job George has been doing. We’ll all just have to wait until the next Statement to hear how wrong these figures were and how much even better George is doing just before the 2015 election…
You’ve got to hand it to HMRC, they are keeping up with the times, and where they suspect some financial skulduggery is going on they will use all resources at their disposal. Including stalking you on the internet.
It’s true- officers in any one of HMRC’s 56 taskforces have been known to snoop through people’s Facebook accounts, Twitter feeds and even do a spot of Google Street View snooping in order to catch canny criminals. They are looking for signs that a potential fraudster’s lifestyle doesn’t fit with their declared income, so looking for Bentleys or Yachts on drives is fair game, along with investigating the private school fees you pay, as in one example quoted by accountancy firm UHY Hacker Young, whose client had a poster advertising a school fete in their garden at the time the Google Vans* passed by.
A spokesman for HMRC confirmed the use of Google Street View, but played down the extent of its use: “We do use Google Street View but our investigations have a greater focus in looking at an individual’s bank account, employment history and the value of their property.”
So is this an inappropriate invasion of privacy, or is it only those with something to hide that are going to complain? And the use of publicly-available social information has been fair game for a while- insurance companies will search Facebook as a matter of course when defending personal injury claims to make sure you’ve not just posted pictures of yourself bungee-jumping, so is this any different, really?
*if this isn’t already trademarked, it soon will be
With all the hoo-ha over the Royal Mail flotation- where shares are currently trading 40% up on subscription price- many of the private investors getting £750 shares may have decided to hold the shares within an ISA to protect the income and gains from tax. Indeed, many people prefer to invest in an ISA over a pension scheme as there are no restrictions on what you can do with the ISA gains as and when you want to spend them. Now, however, it seems the Treasury is considering implementing caps on how much can be invested in ISAs, and on how much can be withdrawn tax-free from personal pensions.
ISAs have been around since 1999 when they took over from the popular PEP scheme. ISAs can either be cash, or hold investments, and when they were first introduced, the contribution limits were £7,000 per annum for shares, or £3,000 for ‘mini’ cash-only ISAs. However, in 2009, the previous Government decided that contribution limits should be upped, and the limit currently stands at £11,520, with a maximum of half invested in cash ISA accounts.
But in a disturbing and likely to be highly unpopular move, the Sunday Telegraph has reported that Treasury officials are worried that ‘ISA millionaires’ are taking the mickey, and are discussing the possibility of introducing a £100,000 lifetime contribution cap.
Now. If you had contributed the maximum to an ISA every year since they appeared, the total possible contributions is around £130,000, and it would therefore take some investing genius to have turned that into a million in 14 years. However, if you bring in any previous PEP/TESSA savings from before 1999, it is possible that some people are sitting on a tax-free mountain. However, the Sunday Telegraph claims this is a tiny fraction of ISA holders.
But if the contribution limit were £100,000, far more people would be affected- an estimated 2% of current ISA investors and an unknown proportion of people who may have been hoping to build up that level of contribution over a lifetime, particularly when planning to use the ISA funds as retirement savings. According to reports, in 2012/13 an estimated 15 million ISA accounts were opened with an average £3,900 investment- this would mean the £100,000 limit would be met in a little over 25 years of average contribution.
But if the average contribution is, and has been, well below the maximum contribution limit, why was the limit increased at all? If it is only the wealthy that benefitted, it is now the not-so-wealthy who end up paying the price.
But Government fiddling with tax free vehicles is not new, and fiddling may be one of the reasons why ISAs are used as retirement savings. Before, money held in a pension plan could be drawn at 50, now the lower age limit is 55 and who’s to say the Government (whomever that may be at the time) won’t change it again, up to 60 or even 65 before you retire. This time, however, reports are not that the age will be adjusted, but the tax free percentage.
The current regime allows you to contribute into a scheme (subject to ever-tighter contribution limits) and receive tax relief at your marginal rate at the time. However, the price for this tax relief on the way in, is that the funds are restricted on the way out, in that, you have to buy an annuity or draw from the capital. When you die, if you’ve bought an annuity there’s nothing left; if you haven’t, you suffer a massive tax charge on any balance. Any pension paid is also taxable as income.
The one shining advantage in the pension structure is that you can withdraw up to 25% of the value of the pension fund out as cash, tax-free, and many people will use this to pay off any mortgage outstanding, so as to reduce living costs in retirement. Sunday Telegraph sources claim that it is this tax free cash under scrutiny, with rumours that the amount will be cut to 20%, or even capped- the Republic of Ireland has introduced a €200,000 cap and the Pensions Institute suggest a cap of just £36,000 would be appropriate.
Sounds like the Government might be scuppering its own plan to get more people to save more for their retirement. Either that, or this is all smoke and mirrors in advance of the Chancellor’s Winter Autumn Statement, so that when he announces that tax relief on pension contributions will be capped at basic rate, we all think it could be worse.
The Treasury deny a lump sum cap is being considered, but say they have been out ‘listening’ *hums twilight zone*.
Apparently, firms oversupplied some European markets with rolling tobacco by 240% and then proceeded to turn a blind eye when it was smuggled back to Britain. On top of that, the tax authorities failed to fine or prosecute the big four tobacco companies.
This has contributed £660m to the loss to the public purse.
“[HMRC] has failed to challenge properly those UK tobacco manufacturers who turn a blind eye to the avoidance of UK tax by supplying more of their products to European countries than the legitimate market in those countries could possibly require,” said Margaret Hodge, chairwoman of the Public Accounts Committee (Pac).
The oversupply went to countries like Belgium and the Netherlands, as well as Spain, which just happen to be convenient holiday destinations or somewhere you could drive to in a van.
Of course, the tobacco industry contested the claims and said: “We don’t oversupply, it wouldn’t make any sense to do that. The UK is one of our most profitable markets.” The HMRC defended themselves too, saying that the illegal cigarette market had been more than halved with nearly 3.6 billion illicit smokes and more than 1,000 tons of rolling tobacco seized in the last two years.
It has emerged that Facebook paid no corporation tax in the UK last year, despite the fact they made an estimated £223million. According to accounts, the British wing of the social network made a loss on these shores.
Figures show that FB’s turnover here was £34.6million, though analysts reckon it was something more like £200million. These figures don’t show up on the UK accounts because Facebook’s sales in Britain are put through Irish books, where corporation tax is lower.
Of course, this is completely legal under the rules of HM Revenue & Customs, but that won’t stop it sticking in the collective craw.
Margaret Hodge, chairman of the Commons Public Accounts Committee, said: “This is yet another example of what appears to be deliberate manipulation of accounts of economic activity to deprive the British taxpayer of a rightful tax contribution, according to the profits they make in the UK.”
Facebook said: “We pay all taxes required by UK law and we comply with tax laws in all countries where we operate. We take our tax obligations seriously, and work closely with national tax authorities around the world to ensure compliance with local law.”