Finance Secretary for Scotland announces income tax changes in Scottish Budget

Finance Secretary for Scotland announces income tax changes in Scottish Budget

In his draft Budget, Derek Mackay, the Finance Secretary for Scotland, has unveiled a series of changes to the Scottish income tax rates and bands.

Mr Mackay used the Scottish Budget to confirm an increase in income tax rates for higher earners, together with the introduction of two new income tax bands.

Image result for income tax changes in Scottish BudgetThe changes will see the higher rate of income tax increase from 40p to 41p, with the top rate rising from 45p to 46p.

Meanwhile, those earning more than £24,000 a year will be taxed under a new 21p band, and a ‘starter’ rate of 19p will also be introduced.

In addition, the Finance Secretary confirmed that Land and Buildings Transaction Tax (LBTT) will be maintained at its current rates, and announced the introduction of a new relief for first-time homebuyers purchasing property worth up to £175,000 in Scotland.

Commenting on the Scottish Budget announcements made by Mr Mackay, Hugh Aitken, Director of the Confederation of British Industry in Scotland (CBI Scotland), stated: ‘By putting productivity at the heart of the Budget, it’s clear that Derek Mackay has listened to organisations like the CBI that have said consistently that boosting productivity is the only sure-fire way to grow our economy, generate the revenues we need for quality, sustainable public services and raise living standards.

‘But things aren’t all rosy – the prospect of income tax rises and added complexity in Scotland’s tax code will be a bitter pill to swallow.’

The Scottish Budget announcements can be read in full here.

Advertisements

SMEs hindered by lack of available funding, research suggests

Research published by banking group Close Brothers has suggested that small and medium-sized enterprises (SMEs) are struggling to access the funding required to grow their business.

The bank found that only 41% of UK firms are able to access finance from their preferred source, with a further 23% stating that while they are able to access the funding they require, it is often not supplied by their preferred provider.

5% of those surveyed said that they wouldn’t know where to access capital that they require, and an additional 33% use an overdraft to help finance the expansion of their business, the research found.

In addition, Close Brothers revealed that the British Business Bank supplied over £3.1 billion in finance to UK SMEs last year.

Commenting on the findings, Adrian Sainsbury, Banking Division Manager at Close Brothers, said: ‘Low productivity hinders economic growth and improving productivity is vital, particularly as the UK prepares to leave the EU.

‘SMEs need access to the right finance and support to invest in training staff or adopting new technologies, so increasing awareness of financial options is crucial.’

Government announces plans for new financial crime centre

Government announces plans for new financial crime centre

The government has announced plans for a new financial crime centre, which will seek to combat money laundering and ‘economic crime’.

Image result for Government announces plans for new financial crime centreThe new National Economic Crime Centre (NECC) will help to tackle fraud and corruption, and will be governed by the National Crime Agency (NCA). Financial fraud costs the UK an average of £6.8 billion per year, according to government estimates.

The NECC and the NCA will share information to generate an understanding of the threats posed by criminals, and will develop a co-ordinated response in order to protect UK businesses and the general public.

The new crime centre will bring together representatives from the NCA, the Serious Fraud Office (SFO), the Financial Conduct Authority (FCA), HMRC and other regulatory bodies.

Commenting on the new NECC, Home Secretary Amber Rudd said: ‘We are taking action against economic crime, and by that I mean the high-level crime, the billions that have been laundered through the City of London.

‘There is a myth that there are no real victims of economic crime, but I have seen first-hand how it can ruin people’s lives. It is not a victimless crime and so it’s vital we tackle these offences that can leave innocent people destitute, cost the country billions every year, and allow gangs to profit from serious and violent crimes.’

BCC downgrades its economic forecast for next three years

The British Chambers of Commerce (BCC) has downgraded its economic forecast for the next three years, citing ‘sluggish’ business investment and household consumption.

In a new report, the business group downgraded its growth expectation for 2017 from 1.6% to 1.5%, and from 1.2% to 1.1% for 2018. Additionally, it now expects the UK economy to grow by 1.3% in 2019, a slight downgrade from its previous forecast of 1.4%.

The BCC also predicts that inflation will peak at 3% during the final quarter of this year, outpacing earnings until 2019.

It is urging the government to ‘fix the fundamentals’ of the UK economy over the coming year. The government must also look to ‘answer the practical questions’ in regard to Brexit and trade, in order to provide UK businesses with clarity, the BCC stated.

Commenting on the BCC’s forecasts, Dr Adam Marshall, its Director General, said: ‘Despite pockets of resilience and success, and strong results for some UK firms, the bigger picture is one of slow economic growth amid uncertain trading conditions.

‘Brexit uncertainty still lingers over business communities, and is undermining many firms’ investment decisions and confidence.

‘While the recent Budget made some welcome steps in the right direction, concerted and sustained action to fix the fundamentals is needed to encourage business investment and growth.’

ICAEW shares tips for arranging a tax-efficient seasonal party

ICAEW shares tips for arranging a tax-efficient seasonal party

An end of year party can often prove to be an enjoyable way to celebrate the festive period with work colleagues. With this in mind, the Institute of Chartered Accountants in England and Wales (ICAEW) has advised businesses to ensure that their party is as tax-efficient as possible.

Image result for work christmas partyAn annual staff party could qualify as a tax-free benefit for employees, provided certain conditions are met.

In order for a party to qualify, the total cost per head must not exceed £150 (including VAT, transport and accommodation). An event which exceeds the cost per head limit will be liable for income tax and national insurance.

In addition, the event must be held primarily for the purpose of entertaining staff, and the party must generally be open to all employees based in that location (separate departmental or divisional parties are permissible).

Commenting on tax-efficient seasonal parties, Sarah Ghaffari, Technical Manager of SME Business Tax at the ICAEW, said: ‘A Christmas party is a great way to reward staff for hard work, and as a little festive gift, HMRC allow up to £150 spend per employee, completely tax-free.

‘The Christmas tax exemption can be enjoyed by businesses of any size, so long as it’s within the £150 budget.’

Chancellor announces Spring Statement date

Chancellor announces Spring Statement date

Chancellor Philip Hammond has announced that his first Spring Statement will be delivered on Tuesday 13 March 2018.

Image result for Chancellor announces Spring Statement dateIn the 2016 Autumn Statement, the Chancellor announced a major shake-up of the government’s fiscal timetable. This saw the abolition of the Autumn Statement, in favour of an Autumn Budget and a Spring Statement.

Commenting on the change, the government said: ‘A single Autumn Budget will mean tax changes are announced well in advance of the start of the tax year in which they will take effect.

‘There will be more time available to scrutinise draft tax legislation ahead of its introduction and commencement. Businesses and individual taxpayers should face less frequent changes to the tax system, helping to promote certainty and stability.’

In order to implement the changes, 2017 has seen two annual Budgets, with the ‘last ever’ Spring Budget having been delivered in March and the Chancellor’s first Autumn Budget having taken place a matter of weeks ago, on 22 November.

Mr Hammond had previously stated that he wished to ‘simplify’ the business of setting taxes and government spending, which had become ‘overcomplicated’.

The new Spring Statement will be used by the Chancellor as a way of responding to new economic forecasts produced by the Office for Budget Responsibility (OBR), and to discuss long-term issues ahead of the 2018 Autumn Budget.

The government has stated that it will retain the right to ‘make changes to fiscal policy at the Spring Statement, should the economic circumstances require it’. However, it also stated that ‘the norm will be that the Chancellor will only make significant tax or spending changes at the Autumn Budget’.

UK state pension ‘least generous of all advanced economies’, OECD states

UK state pension ‘least generous of all advanced economies’, OECD states

A new study carried out by the Organisation for Economic Co-operation and Development (OECD) has suggested that the UK state pension is the ‘least generous’ of all the most advanced economies in the world.

The OECD suggested that the average retiree can expect to receive only 29% of what they earned from working. It also revealed that the level of poverty amongst older individuals in the UK is significantly high, due, in part, to the low level of the state pension.

However, if ‘voluntary’ pensions, such as workplace pensions, are taken into account, the average UK pensioner is likely to receive 62% of their working income – lower than the average for other OECD economies, which currently sits at 69%.

The Trades Union Congress (TUC) has urged the government to reform the way in which the UK pension system works.

Commenting on the OECD’s findings, Frances O’Grady, General Secretary of the TUC, said: ‘The OECD has confirmed what we have long suspected – the UK is bottom of the league for pension provision.

‘Working people in Britain face the biggest retirement cliff edge of any developed nation. We are letting down today’s workers if we can’t provide them with a decent retirement income.’

Responding to the findings, a spokesperson for the Department for Work and Pensions said: ‘We have taken decisive action to address our changing population through a new, generous state pension, retaining the triple lock and protecting the poorest through Pension Credit – reducing pensioner poverty close to historically low levels. But there’s always more to do.’