It can’t have escaped your notice that interminable January is, in fact, about to terminate. Good news for many, but the 31 January also happens to be the last date for filing your 2014/15 Self Assessment tax return, or face a £100 penalty.
If you have been issued with a tax return, you will automatically receive a penalty notice, but if you haven’t received a return but you have untaxed income (eg jobs on the side) or chargeable gains (eg from selling investments), it’s actually still your responsibility to file a return on time. No getting off the hook that way.
So if you do find yourself on 28 January with no completed tax return and only one working day left, what can you do? Well the deadline for filing in paper form is long past, so you have to do it online. If you previously registered to use Self-Assessment online, this registration will still work, and you just need to log in and complete the form using the Revenue’s online software. Alternatively you might be able to find a friendly accountant to do it for you, but at this late stage, you will pay premium rates. If not, you can register to use the online services, but to get all the log in details will take some time, and you won’t be able to file your return on time.
But don’t give up. If you ought to be completing a return and you know you will have tax to pay, it might be worth paying an estimated amount. In times gone by, if you paid your liability on time you could avoid a penalty, but this is no longer the case. However, HMRC will apply interest to overdue sums from 1 February. Note that daily penalties of £10 per day (up to £900) can be levied from the date your return is 3 months late, and 6 and 12 months penalties of £300 (or 5% of the tax due if lower) can be weighed on top, so even if you’re currently facing £100, you do need to get it sorted. Sticking your head in the sand is not a viable option.
And while hundreds of thousands of penalties are issued every year- last year almost 900,000 £100 penalty notices were issued- and although some people will always try to get out of a penalty with the stupidest of excuses, there are very few acceptable reasons why your return is late. However, if you do think you have a valid excuse, this is the form you need to complete. However, a drop of good news for those affected by the December floods- HMRC have specifically agreed not to penalise those who have lost paperwork (along with everything else)- although they will have to email firstname.lastname@example.org with the email subject heading “Severe weather – SA peak” and explain what has happened and when you will be able to file.
It has been said that councils should be raising council tax by £15 a year, to pay for flood defences, which of course, were previously reduced by David Cameron. This comes as more flood warnings are issued to parts of the North West, North East and South West.
MP Liz Truss said that the proposals in Somerset, which allowed some local authorities to whack up council tax were a “very good model”, saying: “I think if you look at the structure for the Somerset Rivers Authority that now has the shadow precept so they are raising that funding locally and I think there’s also a role for that as well.”
Of course, a lot of people will think they’ve suffered enough and that the government didn’t do enough to prevent these floods from happening, so this news is going to get some collars hot. Obviously, families are being hammered by insurance companies in this time, with one report telling of a household that saw their insurance premium increasing to £9,000 from £5,000.
With storms imminent, this is more bad news to areas that have already suffered.
Once again, sugar tax is rearing its head, with David Cameron threatening the soft drinks, saying that Britain is in the middle of an “obesity crisis”. He thinks that sugar needs to be dealt with in a similar manner to smoking.
Now, Cameron confusingly has said that he’s not actually in favour of new taxes, however, he thinks this is the way to tackle the growing problem, and by the same token, save the NHS some money too. It has been reported that obesity is costing the NHS £6bn and diabetes £10bn.
Cancer Research UK have published figures saying that 700,000 more people could develop cancer in the next couple of decades, because they’re overweight.
Cameron said: “Of course it would be far better if we could make progress on all these issues without having to resort to taxes. That would be my intention.”
“But what matters is that we do make progress. We need to look at this in the same way in the past we have looked at the dangers of smoking to health and other health-related issues. So that is my commitment: we need a fully-worked up strategy, we shouldn’t be in the business of ruling things out but obviously putting extra taxes on things is not something I would aim to do, it is something I would rather avoid.”
“I don’t really want to put new taxes on anything but we do have to recognise that we face potentially in Britain something of an obesity crisis when we look at the effect of obesity not just on diabetes but the effect on heart disease, potentially on cancer, when we look at the costs on the NHS, the life-shortening potential of these problems.”
“We do need to have a fully-worked-up programme to deal with this problem and address these issues in Britain and we will be making announcements later in the year.”
Apple have paid £235m to Italian authorities, to settle a dispute with them over allegations of sidestepping tax. The tech behemoth was being probed after allegedly failing to declare over a billion euros (£700m), according to a report by Italy’s La Repubblica newspaper.
A spokesperson for the tax office said that the report was accurate, but didn’t give any more details on the case. Either way, this all came after negotiations which have been going on for months, and Italian authorities asked for the full amount relating to tax years from 2008-13.
Apple Italia is part of the tech giant’s European wing, which is based in Ireland and has one of the lowest levels of corporation tax in the EU. Of course, these arrangements (or similar) are being enjoyed by a number of huge companies, and is part of a big controversy about the taxes paid by multi-nationals.
Google and Starbucks have been under a lot of fire for their arrangements, which are legal, but to many, are irritating.
Apple’s gaffer Tim Cook is not impressed with all these accusations. Recently, he referred to the furore as “political crap” and was adamant that “we pay every tax dollar we owe.”
This won’t be the last of these court cases we see, that’s for sure.
However, the NAO have said that there are improvements, but HMRC haven’t published estimates of where these improvements are coming from, making it “inherently challenging for HMRC to understand whether it is using the best mix of measures to tackle tax fraud in the long term”.
“HMRC has met its targets to raise more tax revenue in the short term. It now needs to consider whether its overall strategy is designed to achieve the best long-term outcomes,” said Amyas Morse, head of the NAO.
“We will be evaluating HMRC’s performance in tackling different types of tax fraud in more depth. As we do so, we will be looking for further improvements in the way HMRC uses data and analysis to understand the effect of its actions in both the long and short term.”
There’s another worry too – the NAO have voiced concerns that HMRC had looked at easier prosecutions in a bid to meet targets, rather than solve the problem in hand.
This follows the news that HMRC are doing a huge overhaul, closing 170 regional offices and replacing them with fewer, bigger hubs.
“HMRC is cracking down on tax avoidance and evasion with a wide range of civil and criminal interventions to collect and protect revenue for public services, steadily reducing the tax gap to its lowest-ever level,” said the Revenue. Over the next decade, we’ll see if their plan has worked out or not.
The government are doing this in a bid to create a new “secondary annuity market”, in addition to the pension freedoms that they first announced in 2014. From April 6th, 2017, tax restrictions for those thinking about selling their annuity, will be removed. That gives pensioners with an existing annuity the chance to sell it for cash.
If you want to that is. No-one is making you or anything.
At the moment, if you wanted to sell an annuity would face a tax of up to 70%, replaced by a tax at their ‘marginal rate’. While the reduction in tax is good, it is risky selling what is basically the right to a guaranteed income.
How you’d be sure you were getting a decent price for your annuity is another headache too. Then, there’s finding a buyer for it. An insurer might want to have it off you, but that’s not guaranteed. And then there’s the timing of the sale, which needs to be taken into considerations. Grimly, you’ll have to weigh up when you think you might die. You may also have to do a medical check-up, before you get a value for it.
Seeing as your annuity payments will end when you die, rather than the buyer, this is something that people are going to have to look at.
There’s a lot to think about, but, if this sounds exactly like the kind of thing you’ve been waiting for, then next April is the time to start making plans for.
We have often wondered aloud when HMRC have announced they are targetting eBay businesses as to whether HMRC had access to Paypal records- as after all how else would they be able to tie up eBay user FrillyKnickers123 with that respectable librarian in Barnstaple who does a sideline in selling second-hand electricals.
Now, new legislation has been drafted that would mean HMRC are completely entitled to nosy into not only your Paypal info, but your eBay (or Gumtree or Etsy or any other kind of online selling platform) as well in order to ascertain whether there is a hidden trade being carried on. The rules, which will be amended through the Finance Act 2016, expand previous data collection powers already held by HMRC since 2011 to include “electronic payment service providers” and “business intermediaries”.
While the first is perhaps obvious, and if banks and the like were already subject to these data gathering powers, it makes sense that electronic-only providers of payment services are also caught. The second category, business intermediaries, covers those who “facilitate and enable transactions between suppliers and their customer or clients” hold “valuable information about the volume and value of suppliers’ transactions.”
The proposed changes do follow a consultation period, and while everyone wants to help prevent tax evasion, some were concerned about the
evergrowing Big Brotherness invasiveness of HMRC’s powers. However, HMRC claims to have “evidence that many such suppliers currently underpay, or do not pay at all, appropriate tax on the income generated from these transactions”, which is probably fairly likely, and should, at least, catch the dodgy traders; it is estimated that the change will generate additional revenue of £285 million per annum by 2020/21. Although it does mean that you might find yourself having to pay more for your bits of tat if the sellers actually have to start accounting for VAT, for example.
If you are struggling with insomnia, the draft legislation can be found here, but if you are an eBay trader who is correctly declaring all income, there’s nothing to worry about right? Right?
An investigation found that Modelez have been wiping out Cadbury’s bills, thanks to their use of interest payments on an unsecured debt, which they just so happened to list as a bond on the Channel Islands’ stock exchange. And lo, the interest forked out on the loan can be offset as a loss against gains made elsewhere.
Of course, there’s nothing illegal about this, but consumers will be unhappy at the news that Mondelez aren’t paying any UK corporation tax, despite Cadbury UK making profits of £96.5m in 2014 and £83.6m in 2013.
With Amazon, Starbucks, and a host of other companies being yelled at over similar situations, this is a chunk of bad PR for Cadbury.
Margaret Hodge, chairwoman of the Commons all-party group on responsible tax, said: “Multinationals like this are deliberately exporting their profits with artificial company structures to avoid tax. The founders of Cadbury who set it up as an ethical company will be turning in their graves.”
A Mondelez spokesperson said: “In common with all global businesses, we pay corporation tax based on the laws of the countries in which we operate. We comply with all applicable tax legislation in the UK, and on a global basis we pay hundreds of millions of dollars in corporate income tax annually. Since 2010 we are proud to have invested over £200m into both UK-based manufacturing and R&D supporting our 4,500 employees in the UK.”
“Importantly, independent academic research has also shown that as a business we are worth over £1bn to the wider UK economy, illustrating our impact reaches far beyond the factory gates.”
Possibly the most boring arguments you’ll see on the internet – and the most vicious – is that between motorists and cyclists. As we know, some drivers get angry at absolutely everything, and cyclists like trolling them. For people who both drive AND cycle (90% of bike owners have a car according to figures), they’re left in an awkward position, and do their best to avoid the whole sideshow.
So with that, social media is about to kick-off royally, as a campaign has started called ‘Get Britain Moving‘, which asks that cyclists pay to be on the roads.
This is the idea of a bloke called Mike Rutherford, and sadly for prog fans, it isn’t the guitarist from Genesis.
He says that drivers have to use our shabby roads and sit in long queues in central London, because the government are building a cycle superhighway, which runs via Hyde Park Corner, Parliament, Blackfriars and the Tower of London.
Rutherford, who founded the Motorists Association decades ago, reckons it isn’t fair that drivers have to sit in jams while cyclists get a nice new road to use. Of course, cyclists also have to use the crappy roads too, and have sat in numerous traffic jams while work was done on the roads since forever.
He wants cyclists to pay a £50 tax a year, if they want to use the roads. He said: “If cyclists want their dedicated lanes and cycle lanes surely they, like drivers, plane users and boat users, should pay for the access. £50 is not a lot and it would help. Cyclists should pay their way. Drivers are one of the highest taxed motorists in the world and he or she pay their motoring related taxes, which total about £60billion a year.”
“I don’t know why cyclists are the only ones who are let off from the charges.” He added: “Cyclists should be insured. They can run people over and kill them and hurt them. It’s happened, so there should be insurance for bikes.”
There is a flaw in Rutherford’s thinking. No-one actually pays a specific tax to access the roads. They’re paid for by general taxes, like libraries or whatever. There’s car tax, but no road tax. Winston Churchill abolished it in 1937. Cars are taxed based on amount of CO2 they emit. And other vehicles don’t pay road tax either, such as Band A motorists and disabled drivers.
So, if a road tax was introduced, it would most likely be thrown at drivers too, on top of the taxes they already pay.
Bitterwallet doesn’t have a dog in this fight, so only have facts to play with. Basically, if you want people to pay directly for access to the roads of the UK, no government will ever charge just cyclists, and not drivers. While it seems unfair if you’re paying a lot to drive, the fact is, there’s people who neither drive or cycle, who are also paying for the upkeep of the UK’s roads.
So there you have it. There’s other discussions to be had, for sure, but when it comes to road tax, this is just factually incorrect.
Should cyclists be insured to use the roads? That’s another debate entirely, as of course, cyclists can cause injury and accident, but then, so can people running, or walking. Asking bikes to have insurance won’t stop congestion either, which seems to be the main crux of the GBM campaign. One thing that should be looked at, is that this campaign should look at ways of arguing that taxes and insurance would be better for society, rather than a revenge punishment for something that irritates drivers.
Should the police do more about dangerous cyclists? Absolutely. We suspect that everyone would like something done about anyone who drives dangerously on the road, but again, taxes aren’t going to fix that. It is obvious there’s a problem (you can argue the toss about whether it is a cultural problem, or a practical one) here, but everyone needs to get their facts and stories straight before it gets fixed. Anecdotal evidence about someone annoying you those times, isn’t enough.
Anyway – cyclists, motorists, and whoever else – it is over to you.
Corporate tax dodging is something everyone is very interested in these days, and so, to European Competition Commissioner Margrethe Vestager, who is looking at investigating McDonald’s over exactly that.
With investigations hitting a number of companies like Amazon and Apple, and money being clawed back from Starbucks and Fiat, McDonald’s won’t be pleased at this news.
They’ve been accused of avoiding around €1bn in tax between 2009 and 2013, thanks to a scheme where they put their money through Luxembourg.
In a statement, McDonald’s have said that they’ve not heard about any of this, and they assure everyone that they do indeed comply with all tax laws and rules in Europe: “From 2010-2014, the McDonald’s companies paid more than $2.1bn just in corporate taxes in the European Union, with an average tax rate of almost 27%.”
“Additionally, we pay social, real estate and other taxes. Our independent franchisees, who own and operate approximately 75%of our restaurants in Europe, also pay corporate tax and many other taxes,” they said.
Of course, abiding by the rules is fine, but when they’re not working in everyone’s best interest, that’s quite another. We’ll see what the commissioner has to say about all this.
When we had a Labour government, the Autumn Statement was an exciting mini-Budget event, with surprise announcements and new legislation. George always promised his Statements would not be any such thing and would merely update the country on his fiscal and economic progress and that’s largely what he has done. No shock announcements (unless the scrapping of the widely unpopular tax credit cuts comes as a surprise to you) but a few little tweaks and adjustments to existing policies to (in most cases) offer a reasonably warming Statement as we head into winter…
So what might you need to know from the Chancellor’s musings earlier today?
No more whiplash cash-for-crash
It seems the government has looked upon the practice of earning a living claiming whiplash quite sternly. Currently those complaining of a non-existent sore neck (at the less horrible end) or those filling cars with non-existent relatives or worse, causing a crash can claim for personal injury from someone’s insurance company and get a cash payout. To try and make it at least a little bit harder for people to claim compensation for exaggerated or fraudulent whiplash claims, the government is ending the right to cash compensation.
However, there is still redress for those genuinely imjured, as instead you will be able to take your case to the small claims court as the upper limit for these claims will be increased from £1,000 to £5,000.
This is, obviously, going to be an inconvenience, and possibly mean that those genuinely affected by whiplash (which really does hurt) don’t get a payout along with the fraudsters, but on the up side the government predict that annual insurance costs for drivers could fall by between £40 to £50 a year. Or they would, if insurance companies were to pass on their cost savings to customers…
More money back for delayed trains and flexible tickets
We’ve told you about how to claim for delayed trains before, but until this summer’s announcement that you will be able to get compo in cash, it was strictly a vouchers-only experience. Now, the Chancellor has announced that in future, commuters will also soon be able to claim compensation from their rail tickets if their train is more than just 15 minutes late, down from an interminable and cold hour-long wait or more.
Also, new flexible season tickets, which would permit part-time season tickets for example, will soon be available on certain lines across the country, including C2C between London and Essex, and the Great Northern Route on Thameslink.
From April 2016, the basic state pension will rise to £119.30 per week, an increase of £3.35. This will be “the highest real terms increase to the state pension for 15 years” and the government are hoping you won’t notice all the current articles about people missing out over the new pension changes…
From 1 April 2016 people purchasing additional properties in which they don’t actually need to love, such as buy to let properties and second/holiday homes will pay an extra 3% in stamp duty. That’s 3% on top of current rates, so if you own a couple of mansions, you will be paying quite a lot of stamp duty from now on.
Money raised from second home stamp duty will be used to help those struggling to buy their first home- like the new Help to Buy equity loan scheme for London which will give buyers 40% of the home value from early 2016, as opposed to 20%, as the current scheme offers.
It is now illegal for young people to be NEETs (Not in Education, Employment or Training) and the Chancellor has previously announced that three million new apprenticeships will be created by 2020, paid for by charging large employers.
The new apprenticeship levy (tax) will come into effect in April 2017, at a rate of 0.5% of an employer’s pay bill, but only where the apprentice tax would come to more than £15,000. This means that it is only really ginormous employers who will have to factor this extra cost, along with the new living wage rates of course, into their wage bill, as it will only be employers whose wage bills are over £3 million; less than 2% of UK employers will therefore have to cough up.
Tampon Tax- a happy compromise?
Last but definitely not least, the Chancellor has decided to appease the little lady, by wading into the tampon tax argument. Around £15 million in VAT is collected each year on sanitary products, just on sanitary products at 5% VAT, and, as we explained to you last month, the the government cannot legally remove all VAT on sanitary products. So instead, they have decided to donate this controversial VAT, or its annual equivalent into a fund that will be donated to women’s charities over this parliament, or until the UK can remove the tax from sanitary products under EU rules. Nice job.
You’d better get your skates on as changes to Insurance Premium Tax (IPT) announced as a surprise in the summer Budget will add £13 to the cost of running a car and £10 for a pet’s medical cover from Sunday, being the 1st of November.
IPT is currently charged at 6.5% but will soon be going up to 9%, an increase which isn’t actually going to hit insurance companies at all, just us poor consumers, as insurers freely admit the additional cost will be directly passed on to customers.
That’s not great news for those insuring the 7.3 million cars, 4.7 million households and 3 million pets who will be affected, according to ABI estimates.
Although the increase will affect most types of insurance, including medical insurance and motorbike insurance, if you ever need to insure your spacecraft or lifeboat equipment, you can breathe easy as these are actually completely exempt from IPT. Travel insurance and insurance of warranties will also escape an IPT rise- but only because these products are already charged at a premium rate of 20%
So is it worth buying your policy now? Well if you buy a policy effective immediately either today or tomorrow you will escape the charge, but the increase will affect any policy starting from 1 November regardless of when a customer bought the policy, so it’s no use trying to buy in advance. If you don’t need insurance until after 1 November, buying now to beat the rise is unlikely to be cheaper than the additional cost of being insured twice for the overlap period. And even if you do beat the deadline now, you will have to pay the increased amount on your next renewal.
So what does the 2.5% price rise look like in cash terms? The average annual car policy will go up to £392 from £379 today, an increase of £13. It’s worse news for younger drivers though, who could see premiums increase by £42 a year, according to the AA, as they already get stung pay the highest premiums of any age group. Their new average premium will now be £1,319, up from £1,278. In fact, some insurers have lobbied the Treasury to exempt younger drivers from insurance premium tax for at least the first year of their first car insurance policy. A mere drop in the ocean perhaps.
But still, when it’s a tax on a compulsory insurance, it’s pretty much a compulsory tax rise for all car owners, like it or not. “Millions of people across the country face being hit in the pocket by this rise,” said James Dalton of the Association of British Insurers (ABI).
“Whether it’s a legal requirement or you want to buy extra cover, insurance is a financial safety net, not a luxury,” he finished, folding his arms.
Politics has never been so exciting. Not only do we have unconstitutional Lords, but we also have erstwhile Payday loans campaigner Stella Creasy delivering heartfelt pleas to ministers comparing sanitary products to jaffa cakes. So what is her beef and is it going to get sorted?
Over 250,000 people signed a petition calling for the Government to stop treating women’s sanitary products as ‘a luxury’ and to scrap the VAT on them. It sounds a reasonable request and yet the Government (this one nor its predecessors) has consistently failed to do anything about it. Why deliberately nark half the electorate? The answer, as ever, is to do with the EU.
The problem is that the UK zero rate of VAT is actually illegal under EU law. We aren’t allowed to have it- member states may only have a main rate of 15-20% ish and a reduced rate of 3-5% ish. However, back in 1972 when we joined our Euro friends, a compromise was reached whereby the UK was allowed to keep the things which had been zero rated as zero rated, but no new items could be so designated. This is why ebooks (never even dreamt of in 1972) are standard rated at 20% yet books are zero rated. And tax cases have found ebooks to be sufficiently different that it would constitute a new item being classed as zero rated which we can’t do. Jaffa cakes won an exciting VAT case (yes, really) by being designated as a cake instead of a biscuit, as cakes are zero rated but chocolate covered biscuits are standard rated.
Currently in the UK, sanitary ware is charged the reduced rate of VAT as that is as low as we can legally do so- to make them standard rated would theoretically require all member states to vote on a resolution on just this issue. However, there may be some hope on the horizon as the European Commission has responded to the current flare up by saying that a review of the VAT rules will take place in 2016. Perhaps they will allow us out of 1972 for a few minutes to reassess what is crucial for VAT charging purposes.
It sounds like a silly question, as surely you either are a Scottish taxpayer or are not. However, HMRC has just published new guidance for people who might or who might not be Scottish and who need help working it out.
Of course, the guidance isn’t just for nationality purposes, but is rather to determine who is liable to pay the new Scottish rate of income tax. For those of you currently scratching your heads, one of the things that came out of the devolution battle was the fact that Scotland would be allowed to levy it’s own rate of income tax (even though it has atually had this power in theory since 2012).
So how do you know if you’re a Scottish taxpayer or not. Apparently it’s more than a feeling as HMRC state clearly that “none of the following will make you a Scottish taxpayer:
national identity – you regard yourself as being Scottish
location of work – you work in Scotland
you receive a salary or pension from a Scottish employer or pension provider
you travel in Scotland – for example, driving a lorry in, or frequent work visits to Scotland”
Generally you are a Scottish taxpayer if you live in Scotland. If you only have one home, and that is in Scotland, you are a Scottish taxpayer. If you have more than one home, it is a little bit more complicated, but basically you are Scottish in taxpaying terms if you live in Scotland at least as much as you live anywhere else in the UK.
If you have no home, then if you spend more time in Scotland than anywhere else in the UK in terms of day counting, again you are Scottish. The reference to elsewhere in the UK is not because the Government doesn’t believe that Scots can own homes in Spain or Tuscany or Bulgaria, rather that if you were spending more time outside the UK than in it, then that would be a UK residence issue, rather than a Scottish issue. You can read the minute detail in the Scotland Act 2012 if you are so inclined.
So, being fiscally Scottish or not is a matter of fact, and if you are Scottish, you will have to pay the Scottish rate of income tax on earnings and pensions (but not savings and dividends) from next April. Except they haven’t quite figured out how much that Scottish rate will be just yet…
The tax credit argument has been rumbling on for some time, with everyone except MPs it seems having some issue with the plans to cut tax credits put forward by Chancellor George Osborne in his summer budget. In a shock move the House of Lords have now forced George to “lessen” the impact of tax credit cuts on families and to provide some kind of “transitional help” for those affected.
Mr Osborne, during Treasury questions, said: “We will continue to reform tax credits and save the money needed so that Britain lives within its means, while at the same time lessening the impact on families during the transition.”
The savings from his plans totalled £4.4bn, so he’s going to have to find a more palatable way to save the cash when announced revised and softened plans in his Autumn Statement due at the end of November.
How will it affect me?
Under George’s plans, the income threshold for receiving Working Tax Credits and Child Tax Credit was due to be dramatically cut from April next year, along with a sharper rate of reduction in credits once the income threshold was reached.
Plans were criticised as they affected mainly those working but at low rates and the plans were such that low-income workers were facing losing £1,300 a year, which is a considerable sum when you don’t actually earn very much.
While the Chancellor would have time to draft new legislation to accompany his Autumn statement, and get it passed into law (assuming the Lords do not intercede again) ahead of the scheduled April 2016 date for changes, it is likely that anyone affected will see at least a softening of the severity of the changes, together with some kind of transitional help to protect those for whom tax credits are crucial- at least until the new living wage has its intended effect for lower income workers.
Why is it such a big deal?
As part of a gentlemen’s agreement, established as a principle in 1911 during the constitutional gridlock that followed a decision by peers to block the Liberal Party’s “people’s budget”, the Lords do not interfere with financial matters that have been agreed by MPs. The tax credit changes have been approved by the commons three times, owing to the Government’s majority, which is sorely lacking in the House of Lords. However, a gentlemen’s agreement only works if both parties believe the other to be acting in a gentlemanly manner. Here, the government was convinced the Lords would sit quietly and the Lords felt the government had not duly considered all the relevant impacts.
Part of the problem is that the Tax Credit changes were not included in a Finance Bill, which gets debated and allows time and opportunity for tweaking of legislation, but was instead pushed through as an unamendable take-it-or-leave-it statutory instrument. And the Lords left it, with two motions passed which will force the Government to delay the cuts until an assessment of their financial impact is carried out, as well as implementing provisions that will provide financial redress to the millions of tax credit claimants who will be affected when their entitlements are reduced.
Now, of course, the Government is livid with the Lords, claiming that is is unconstitutional for an unelected body to overturn decisions of the elected body of MPs. No comment was made on the constitutionality of electoral promises that are subsequently welched on. In any case, both David Cameron and George Osborne are of the opinion that the Lords need to be “dealt with” for daring to overturn their decision.
But what do you think? Are the delay and adjustments to the cuts a good thing or a bad thing?