You may recall that, in March’s Budget the Chancellor announced a new plan to take 95% of savers out of tax on the interest on their savings. However, rather than wait until April 2016 to take advantage, why not start earning tax-free interest now. Interested?
You see, the new limits of £1,000 worth of interest for basic rate taxpayers, and £500 for anyone paying higher rate tax (if you pay additional rate tax at 45%, the Government reckon you can do without the savings allowance), take effect from April 2016,and at that point, given the vast majority of taxpayers won’t be paying tax, banks will stop deducting 20% tax at source (ie before you even receive your interest payment, as they do currently). However, if you are savvy enough to open an account that doesn’t pay interest until after 5 April 2016, then all of the interest falls into the 2016/17 tax year, and the new savings allowance applies.
And it’s official. A spokesman for HMRC told The Telegraph: “If a savings product, such as a one-year bond, taken out now, pays out interest before April 2016, the saver will not be able to benefit from the new personal savings allowance as they have a right to access interest before April 2016. But if they cannot touch the interest before April 2016, the saver can take advantage of the new allowance.”
So, what you are looking for in order to facilitate this wheeze are accounts that only pay interest annually. You might consider the market leading Virgin Defined Access E-Saver, which pays 1.41% gross, which would allow a basic rate taxpayer to stash £70,920 into the before breaching the savings allowance threshold, halved to £35,460 for higher-rate taxpayers. However, closer inspection of the terms and conditions reveals that the annual interest isn’t paid on the anniversary of account opening, but is instead credited on 11 March each year. Which means the interest will be taxable, and the net equivalent is reduced to 1.13%
Consequently, the second best product on the market, the Paragon Bank Limited Edition Easy Access, begins to look more attractive, given its rate of 1.35% gross paid annually on the anniversary of the account opening, and therefore tax free so long as it falls within the savings allowance amount.
It’s May. People are starting to go on holiday. Few people are thinking about their tax return, given the first filing deadline is a little under six months away. However, despite this being the notional ‘quiet season’ for HMRC, Which!!! are reporting numerous complaints from members, as it seems it is still just as impossible to get through.
Last December Which!!! performed scientific tests to see how long it took for HMRC to answer the phone. While the average time was 18 minutes, some calls took over 40 minutes to get an answer. And as we’ve all heard, hang on for too long and the phone will just cut you off, leaving you no option but to just hang on the telephone for hours again.
Back then, HMRC admitted there was a problem, saying it had hired extra staff for the January ‘tax season’ and trained more people to take calls. New Government plans for a’digital account’ should improve the position, but that’s a way off and Which!!! think its “worrying” that people are waiting more than 20 minutes, and often up to 40 minutes, now to get through, when the pressure on phone lines is at its lowest. This “doesn’t bode well for later in the year.”
However, Which!!! are never ones to be daunted by the fact that their earlier investigation actually resulted in a poorer service than was offered previously, and they have now launched a poll asking people to log how long they have been waiting to speak to HMRC. Presumably they are planning to use this information to beat HMRC around the head at a later point.
If you are in the unenviable position of needing to call HMRC, prevailing advice seems to be to get up early- the general enquiries number (0300 200 3300) and self-assessment helpline (0300 200 3310) both open at 8am, so early birds get through much quicker. Hopefully.
People are deserting McDonald’s and, to make matters worse for the beef dealers, the EU’s competition commissioner has floated the idea of expanding a corporate tax investigation to McD’s.
Magrethe Vestager said that her charges were looking at whether or not they should launch an inquiry following claims by campaigners and unions of an alleged deal with Luxembourg, which basically allows the burger vendor to hugely reduce their tax bill on European sales.
This investigation would be added to the one that is already swooping down on Luxembourg’s tax arrangements with Amazon and Fiat. Of course, the EU is already ferreting around Apple in Ireland and the Dutch wing of Starbucks.
Officials believe that some tax breaks offered to big companies breach Europe’s rules on state aid, and basically is tantamount to an unfair subsidy which puts other companies at a massive disadvantage. This all follows the publication of a report by War On Want who reckon that McDonald’s siphoned off billions of euros of franchise sales from EU nations between 2009 and 2013.
The report said that McDonald’s coughed up €16m in tax, but, if the tax had been paid in the countries that the sales were made, then it is thought that Ronald McDonald would have to pay a total of €1.05bn in tax.
McDonald’s have outright rejected these allegations.
Gadget vendors Apple have been warned that they’re looking at a £1.5billion bill if they are found guilty of avoiding taxes across Europe. The tech behemoth is currently under investigation by authorities in the EU who, if they find Apple guilty, they have the power to rake all those unpaid taxes back in.
This week, Apple talked to investors about the scale of the potential repercussions. The amounts they could end up paying out ‘could be material’, which is a stock market term which translates to 5% of their average profits over the last three years. That should work out at over a billion quid, which is not to be sniffed at.
Apple’s deal with Ireland and taxes has been scrutinised for a while now.
In a statement to the stock exchange, Apple said: “If the European Commission were to conclude against Ireland, it could require Ireland to recover from the company past taxes covering a period of up to 10 years reflective of the disallowed state aid, and such amount could be material.”
Of course, Apple made £8.9billion in profit between January and March of this year, so they’re invariably not too worried about these looming tax penalties. They’ve probably got a couple of billion down the back of the sofa that’s fallen out of their jeans pocket.
European competition chiefs will release their report in June.
As announced in last year’s Autumn Statement, from this Friday, 1 May, Air Passenger Duty (APD) will be scrapped for children under 12. Interestingly, the removal of the charge applied to both new and existing economy-class bookings, meaning if you had already booked ahead, you may have already paid APD that actually isn’t due. Unfortunately, however, not every airline is automatically processing these refunds and you may have to do something to claim back the APD, which could be up to £97 per flight.
How much you could reclaim depends on when you booked at how far you are travelling. If you booked before 19 March 2014 , besides being a very organised person, you’ll probably get £13 for flights under 2,000 miles, £69 for flights between 2,001 and 4,000 miles, £85 for flights between 4,001 and 6,000 miles, and £97 for flights over 6,000 miles. Flights booked on or after 19 March 2014 will be due a refund of £13 for flights under 2,000 miles and £71 for longer flights
Note that APD is charged only on outgoing flights from the UK, not on inbound ones and strictly speaking, is charge paid by the airlines to HMRC, although generally the cost is included in the ‘fees and charges’ element of ticket prices. As a result, if you have paid APD for children for flights leaving on or after 1 May, they ought to refund the charge, with HMRC confirming there’s no deadline to reclaim the APD. The new waiver does not apply to non-economy flights, nor on tickets for children under 2 (as they don’t have to buy a seat, therefore pay no APD). Also note that the exemption is for children under 12, at the time of the flight, so if you paid APD last year for your 11 year old who is now 12, hard cheese.
But what if your airline isn’t doing automatic refunds? MoneysavingExpert have produced a handy table which tells you which airlines are offering automatic refunds and which are not, and what you need to do. In most cases it tends to be the cheaper airlines that aren’t offering automatic refunds, but you generally just need to complete some kind of claim form in order to get your APD back. Examples of airlines that do require a some kind of action include FlyBe, Jet2, WizzAir and everyone’s favourite Ryanair. However, note that Ryanair did actually stop charging children APD over a month ago in an uncharacteristic show of generosity, and that WizzAir are claiming that some of their fares were actually lower than the APD charge, and in those cases, refunds of APD will not be given. Which seems reasonable, if far-fetched.
Finally, make sure you keep an eye on the APD paid for older children if you’re booking flights beyond 1 March 2016, when the exemption will be extended to children under 16.
Although originally introduced as a universal benefit, child benefit became (partially) means-tested in 2012, being restricted for those families where one person earns £50,000 and scrapped completely if one partner earns £60,000 or more. However, to protect stay-at-home parents whose only income might be the child benefit payments, those ceasing to be entitled to the benefit could deal with it in two ways- disclaim it, or repay the excess amount claimed (which could be all of it) through the self-assessment system on a tax return.
However, because of the way the self-assessment system works, this meant that these high-earning parents were actually able to take advantage of an interest-free ‘loan’ from the taxman, by receiving payment of child benefit well in advance of the date of repayment. For example, child benefit paid between April 2012 and April 2013 would be due for repayment on the self-assessment deadline of 31 January 2014. In some cases, the underpayment could be collected via a change to the tax code in the following year, giving an even longer extension on the loan. In either case, the ‘loan’ from HMRC, which, for a family with two children amounts to over £1,700, could be interest free for over two years. Which is a great deal if you can get it.
But, it seems that someone at HM Revenue & Custom has realised this unforeseen benefit and they are now taking steps to address the issue. HMRC is now identifying affected parents and is making the relevant adjustments in the current year tax codes- which will take effect from this month- in order to claw back the child benefit that is not due at the same time as it is being paid out.
Normally, tax codes are used to collect underpaid or overpaid tax from a previous year, and allocates taxpayers with an personal allowance amount, less any deductions for things like overpaid child benefit. For example, a working age individual would normally have a standard tax code for 2015/16 of 1060L, which means that a payroll department will know that the first £10,600 of a person’s wages should be paid free of income tax. For those still receiving child benefit even though they are not entitled, from this year onwards this code will be changed, assuming there are no other issues or deductions, to something close to 700L, so affected taxpayers will pay slightly more tax each month, at approximately the same pace as they receive their four-weekly child benefit payments.
Unfortunately it appears HMRC has not explained why they are changing codes, which could cause even more congestion on their phone lines, already filled with pension freedom day pensioners querying potential tax implications of withdrawals, from confused high-earning parents. Besides, given HMRC’s track record with spontaneously adjusting tax codes (or not), let’s hope they manage it a little better this time around.
Most people will have been at least mildly pleased with last week’s Budget, with a number of small giveaways that will generally have a positive effect on the pocket. One group of announcements that most will have filed under positive news were those relating to sin taxes on beer, cider and spirits, which have been cut by 1p and 2% respectively. But apparently we’re all wrong, with the duty cuts being described as “shameful” and “a total disgrace”.
The Alcohol Health Alliance, which is comprised of medical bodies, charities and alcohol health campaigners, has come out in strict disapproval of the cuts, and the freeze on wine duty, with Professor Sir Ian Gilmore, chair of the Alcohol Health Alliance, claiming the cuts were evidence that the chancellor had prioritised the interested of big business over public health.
“This decision is a slap in the face to our doctors, nurses and emergency services on the front line that are paying the price for this cut”, he said. “With over one million alcohol-related hospital attendances every year, our NHS simply cannot afford for alcohol to get cheaper.
“The government’s own figures show that alcohol-related harm costs the UK £21 billion every single year. With less than half of this recouped through current levels of taxation, to suggest lowering taxes even further is thoroughly shameful. These cuts also mean that cheap, strong alcohol that gets into the hands of our children will be even more affordable now,” he finished, not mincing his words.
Katherine Brown, director of the Institute of Alcohol Studies agreed, calling the decision to cut tax on cider and spirits at a time when the NHS is at “breaking point” a “total disgrace”.
So why did the Chancellor do it? Is he hoping to woo beer drinkers in advance of May’s election? Possibly. However, the subject of alcohol duties has been a subject of sustained campaigning by the trade, specifically the Wine and Spirit Trade Association (WSTA) who welcomed the cuts to the “extremely high” rates of duty paid by UK drinkers. But as part of the Drop the Duty! Campaign, the arguments for a cut in alcohol duties are that cheaper prices will stimulate this area of the economy, and lead to greater prosperity and more jobs.
Independent analysis commissioned by the WSTA and carried out by Ernst Young showed that a 2% cut in duty would boost public finances by £1.5 billion. David Frost, chief executive of the Scotch Whisky Association (SWA) said the cuts send an “important signal on fair taxation” to the Scotch industry’s export markets; the SWA previously blamed the 5% decline of the UK market for Scotch whisky in 2014 on the country’s “excessive” levels of tax on spirits.
So what do you think? Will a penny saved in duty result in more alcohol-related NHS spending, or will it just mean our pockets are ever so slightly fuller after a night out?
In a little over an hour, and filled with cheap jokes and tired soundbites (“Tax doesn’t have to be taxing”), George Osborne has finally divested himself of his sixth Budget. While he promised no gimmicks or giveaways, there were a few nuggets, and a few surprises hidden away. So how will they affect your pocket?
First of all, the Chancellor announced the death of the tax return. For many people, including those with small businesses, the Chancellor reckons he’s going to scrap the return system for millions of people, replacing it with a new ‘digital account’ system that can be completed anytime. More details are awaited but this doesn’t sound at all like a technological car crash waiting to happen… Also, as widely predicted, the personal allowance will go up to £11,000, but not for a couple of years (2017/18). From April 2015, the tax-free amount will be £10,600 a year.
Other measures related to small business include changes to business rates and the news that Class 2 National Insurance contributions (currently £2.75 a week for the self employed) will be abolished during the next parliament. Assuming George is still in the chair, one supposes…
But the biggest news from the Budget is for savers. The ISA contribution limit, massively inflated last year, will go up to £15,240 in April, but under current rules, the contributions into ISAs are one-time only- so if you need to take some cash out for whatever reason, you cannot refill your ISA if you’ve used all your contribution, even where you have clearly taken the cash out of the ISA. Today, the Chancellor has announced a new ‘fully flexible’ ISA that will allow you to withdraw and reinvest in an ISA, provided the net amounts contributed do not exceed the limits.
And there’s even better news for first-time buyers. A new help-to-buy ISA will help people save up for a deposit for their first house, which will even benefit from Government contributions into the savings pot. For every £200 saved, the Government will put in £50, meaning for a £15,000 deposit, you will only need to save £12,000. The changes to pension rules previously announced will also be tweaked and added to, allowing 5 million existing pension holders to access an annuity without punitive tax charges, although they will need advice to ensure they aren’t ripped off by unscrupulous annuity buyers.
But the top news for savers is that the first £1,000 of interest earned (£500 for higher rate taxpayers) will now be totally tax free. This will take 95% of taxpayers out of tax on their savings, but this might be partly due to the fact that savers can’t earn much interest given the shockingly low rates.
Finally, duties on things you might spend your cash on- beer duty is down by 1p, and the duty on cider and spirits is down 2%. Wine duty and fuel duty is frozen.
George’s final Budget (of this parliament anyway, we can’t guarantee whether he’ll be here or not come May) will be delivered to the House tomorrow, and the grapevine is unusually light on rumours as to what surprises might pop out of that red box. However, the Chancellor himself has promised “no giveaways, no gimmicks” in this week’s Budget, but here are a few things we think we might see tomorrow, that might will improve your pocket’s prospects.
This time around, falling inflation and lower interest rates mean payments on the national debt will be reduced, which could give the Chancellor room to provide a tax break for middle-income families- the OBR is widely expected to announce a £6bn cut in government borrowing for 2015-16. However, George has to balance the extra wriggle room he has available, with whether he wants to save the juicy stuff for election manifestos instead…
What he could do is raise the personal income tax allowance to £11,000, a £500 increase on the previously announced £10,500 from this April. People earning below that amount every year wouldn’t have to pay any income tax at all, and everyone else would save a little bit on their annual tax bill.
Other potential changes affecting individuals could see an increase in the inheritance tax nil rate band- bearing in mind earlier promises to get it to £1 million by 2020, which would be good news for all those owning property in London and the South East. However, on the flip side, it has been suggested that the Chancellor might look to raise cash by announcing the withdrawal of private residence relief on houses worth more than £2 million. Under current rules, UK residents don’t pay capital gains tax when selling their home, but it could be limited to provide relief only on where proceeds are under £2m. This would also take the wind out of Labour’s mansion tax sails in an election campaign face off.
Finally, to help low-paid workers, George could raise the level at which National Insurance contributions kick in. This would help lower earners, as this has become a bigger issue for low earners than their income tax while the NI threshold remains so much further behind the income tax personal allowance.
HSBC’s tax scandal just won’t go away and now, Argentina are getting involved, saying that the banking group needs to give them $3.5bn (£2.32bn).
The country’s tax authorities are getting involved in a bit of financial argy bargy* and have issued the request after the Central Bank of Argentina briefly suspended HSBC Bank Argentina’s operations of transferring money and assets abroad for 30 days.
This follows Argentina’s decision in 2014 to charge HSBC with aiding 4,000+ clients to evade taxes with offshore asset trickery.
Of course, lawyers, HSBC Argentina are denying this and saying they’ve done nothing that goes against Argentinian laws. Being the world’s ‘local bank’, you’d hope they’d know about local laws.
Anyway, at a news conference, Argentina’s highest ranking tax official – Ricardo Echegaray – said that the country are prepared to go through criminal proceedings and noted that officials have been approached for information by British authorities. And there’s you think that Britain isn’t doing anything about tax evasion! (Only one prosecution thus far)
It has been a heavy week for HSBC’s chief executive Stuart Gulliver, who is having to give evidence on all this to MPs, with the Public Accounts Committee looking to get someone, anyone, to accept some accountability for all this. Of course, Gulliver has already said sorry about this tax business, but that won’t be enough.
*Bitterwallet is requested, by law, to mention the phrase ‘Argy Bargy’, as this article concerns something to do with Argentina.
Banks, accountants and businesses that help people evade tax are looking at giganto fines, according to George Osborne. The Chancellor is clearly responding to the HSBC scandal where their Swiss wing helped a load of bad sorts sidestep that pesky business of taxation.
Apparently, Gideon will be using the platform of a policy statement before the election to say that companies and organisations who are enabling tax-dodging will face the same penalties as those who benefit from dodging. Words being thrown around are “corporate failure” and the severe sounding “economic crime.”
People who fund political parties across the board will be hoping that he’s bluffing, eh?
Of course, this is a headache for Osborne, as he batted away questions about whether or not he’d talked about the HSBC scandal with Lord Green who just so happens to be a former HSBC chairman and was given the role of Trade Minister by the Government in 2011. Speaking about that, Osborne said: “Some very serious allegations have been made about HSBC Swiss and its role in knowingly advising people on tax evasion. Of course this is a matter that our criminal authorities, prosecuting authorities will want to look into.”
“We are currently in active discussion which I think will come to a fruitful end to get the French to allow us to pass some of this information to the Serious Fraud Office and other prosecuting authorities to address the concern… about the potential or alleged role of banks in this affair.”
HSBC are, as you’re more than aware, in the middle of a rather large tax avoidance scandal. Even though they said ‘sorry’, it hasn’t stopped a 17% fall in their annual profits.
Of course, the bank saw profits fall to £12.14bn, which is still a stupefying amount of money, but we can still laugh at them. They reckon that this drop reflects ”lower business disposal and reclassification gains and the negative effect, on both revenue and costs, of significant items including fines, settlements, UK customer redress and associated provisions”.
Did you catch all that? In English, what they’re saying is that a number of scandals is costing them money, including the mis-selling of payment protection insurance (PPI). Basically, they’re sorting out their own mess as well as watching their share price falling by more than 5%.
And what’s even more ridiculous about all this? This news follows reports that HSBC’s chief executive Stuart Gulliver has himself enjoyed a Swiss bank account and the benefits that brings you. While he’s promising to reform the bank in the wake of all manner of allegations, this is rather embarrassing for him. It is worth pointing out, legally, that Gulliver denies doing anything wrong.
He said: “2014 was a challenging year in which we continued to work hard to improve business performance while managing the impact of a higher operating cost base. Profits disappointed, although a tough fourth quarter masked some of the progress made over the preceding three quarters.”
“Many of the challenging aspects of the fourth-quarter results were common to the industry as a whole.”
Are you tired of having to hold things in your hands and poke at devices with your beautiful, delicate fingers? Want to get online without all the hassle of moving your arms, but don’t fancy the idea of Google Glass (then again, no-one does)?
Well, you’re in luck! That’s because a research division of the U.S. military is working on a chip (roughly the size of 10p piece) which is put in your brain and works like a computer from there. If you want to access some dirty films online, you’d simply have to think about it.
That could be a problem if you spend all day thinking about dirty films and you’re in a meeting with human resources and all you can see is a load of sweaty limbs and bodily fluids. It all sounds like a science fiction film doesn’t it? And they never run smoothly.
This idea has been hatched up by the brilliant people at the Defense Advanced Research Projects Agency (DARPA) who basically get paid to come up with crazy ideas and then try and execute them. That said, some of the things they’re partly responsible for are a predecessor to the internet, so they’re not daft.
“The short term goal of the project is the development of a device about the size of two stacked nickels with a cost of goods on the order of $10 which would enable a simple visual display via a direct interface to the visual cortex with the visual fidelity of something like an early LED digital clock,” report Humanity+.
“The implications of this project are astounding.”
Thus far, the research has tried it out on a bunch of fish, so it is too early to say how this is going. Besides, to fish even use the internet? Would they even know where to find dirty films with the use of their brains? Either way, when Samsung start installing bloatware into your mind, don’t say we didn’t warn you.
The heat is being turned up on HSBC as the authorities launch an investigation into the bank’s private bank in Switzerland over allegations of money laundering. This, you’ll know, follows the news that HSBC seem to have been turning a blind-eye to dodgy goings on where the bank have been helping blood diamond traders and gun-runners to evade taxes. Allegedly.
Prosecutors in Geneva have announced that they’re searching the premises of HSBC Private Bank. In a statement, they said: ”Following the recent revelations related to the HSBC Private Bank (Switzerland), the public prosecutor announces the opening of a criminal procedure against the bank … for aggravated money laundering.”
They also added that this probe was against HSBC themselves, but depending on their findings, they could well include individuals who have been ”suspected of committing or participating in acts of money laundering”.
The cache of leaked files given to the press makes a lot of bold claims that will be making a lot of people very nervous. There’s accusations that HSBC’s Swiss private banking arm helped out the wealthy from more than 200 countries to sidestep taxes, on accounts that totalled over £77bn. There’s some celebrities being implicated too, as well as arms dealers, dictators’ associates and other “outlaws”.
A statement from HSBC said: “We have co-operated continuously with the Swiss authorities since first becoming aware of the data theft in 2008 and we continue to co-operate.”
Tampons! The scourge of wimpy men the world over who feel a bit awkward for having to buy something that goes in a lady and gets some gunky blood on it. Of course, you don’t buy them soiled so you’d think they’d treat them like buying toilet roll, but no, it makes some blokes screw their faces up. The wusses.
Anyway, the weird attitude toward tampons is, bafflingly, still a thing in 2015, where they’re still a product that is deemed ‘a luxury’ for women and are taxed accordingly. Presumably, women are supposed to use bits of old rag or something, which would stink up the place and ensure that they couldn’t work properly or function as normal members of society.
With that, a petition is doing the rounds, with over 150,000 signatures aiming to ditch the tax on tampons.
There’s been a 5% tax on tampons for years now, because HMRC think that they’re a ‘non-essential, luxury’ item. As the petition points out, this is a bizarre decision that is costing consumers money, needlessly, given that tax-exempt things include cold sandwiches, ’edible sugar jellies’ and ‘crocodile meat’.
It is nigh-on impossible to argue against the fact that tampons are as close to an absolutely necessary product for millions of people, making this one of the most baffling consumer issues of the past 50-odd years.
The petition says: “Sanitary products control and manage menstruation. They are essential because without them, those who menstruate would have no way of pursuing a normal, flexible, public or private life and would be at risk of jeopardising their health. We should all feel free to enjoy a life of our choice: period or no period.”
“Essential items should not be taxed because tax implements a monetary discouragement that lessens a product’s accessibility and affordability. It is therefore damaging to stand by a tax that has restricted the public’s access to healthcare and constrained their ability to consume a vital range of products for decades.”
“We are here to remind HMRC that menstruating men and women exist and that public policy should reflect this. Tax allocations should expose the needs of society as a whole, and the needs of those who menstruate as well as those who don’t. Because we care about these people, this campaign was made in support of tax allocations representing them and reflecting something that is vital.”
Insert your own ‘Tax office rakes in blood money’ joke here.