Committee raises concerns over impact of business rates on UK firms

Committee raises concerns over impact of business rates on UK firms

The Treasury Committee has expressed concerns in regard to the impact of the UK’s current business rates system on firms.

In a letter to Chancellor Philip Hammond, Nicky Morgan, the Chair of the Committee, stated that business rates place a ‘financial burden’ on UK businesses, and questioned whether the system is ‘fit for purpose’.

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‘It’s clear that many bricks and mortar stores are struggling to remain competitive against online retailers, with the Chancellor admitting that business rates can represent a high fixed cost for some businesses,’ said Mrs Morgan.

‘We are likely to scrutinise business rates further as part of our Autumn Budget inquiry later this year.’

In response to the Treasury Committee’s letter, the Chancellor ruled out reforming the business rates system, but did admit that the tax has ‘hit the high street too hard’.

Mr Hammond also stated that the government ‘needs to find a better way of taxing the digital economy’, and that it has been ‘making progress’ in regard to this.

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Abolition of stamp duty for first-time homebuyers ‘benefits 69,000 households’

Abolition of stamp duty for first-time homebuyers ‘benefits 69,000 households’

The abolition of Stamp Duty Land Tax (SDLT) for first-time homebuyers of properties worth under £300,000 has ‘benefitted 69,000 households’, government data has suggested.

During the 2017 Autumn Budget on 22 November 2017, Chancellor Philip Hammond announced the abolition of SDLT, with immediate effect. From this time, most first-time buyers paying £300,000 or less for a residential property are no longer required to pay SDLT.

Official figures for the period to 31 March 2018 show 69,000 first-time homebuyers have ‘benefitted from the SDLT abolition’, saving an average of £2,300 each. The government stated that this is in line with its aim of ‘helping over one million people to get onto the housing ladder’ over the next five years.

Other initiatives introduced to help individuals to get onto the housing ladder have also seen a significant uptake, with more than 387,000 people using the government’s Help to Buy scheme, and over 1.1 million Help to Buy ISA accounts having been opened.

Commenting on the data, Mel Stride, Financial Secretary to the Treasury, said: ‘I’m proud that the cut to stamp duty for first-time buyers is helping to realise the dream of home ownership for a new generation, alongside building more homes in the right areas, and generous schemes such as the Lifetime ISA and Help to Buy.’

However, estate agent regulatory body NAEA Propertymark warned that the cost of purchasing a home for first-time buyers is ‘still very high’, with many individuals finding it ‘difficult to save for a deposit’.

New rules introduced to tackle online VAT fraud

New rules introduced to tackle online VAT fraud

New rules aimed at combating online VAT fraud have been introduced by the government.

The rules, which were first announced by Chancellor Philip Hammond during the 2017 Autumn Budget, strengthen the powers to make online marketplaces accountable for VAT fraud perpetrated by online sellers using their platforms.

Under the government’s new rules, online marketplaces will be liable for any unpaid tax if they do not remove sellers who fail to pay VAT from their sites.

The regulations apply to both UK sellers and those based overseas.

Marketplaces are also now required to ensure that sellers using their platforms display a valid VAT number. The government hopes that this will help potential buyers to make an ‘informed choice’ in regard to purchasing goods from a VAT-registered business.

Commenting on the introduction of the new rules, Mel Stride, Financial Secretary to the Treasury, said: ‘Whilst the honest majority pay what they owe, some businesses that sell goods online to UK shoppers are failing to pay the correct amount of VAT.

‘We are clear that everyone must pay their fair share of tax, and tackling tax evasion in all its forms is a top priority for the government.’

Spring Statement heralds the ‘light at the end of the tunnel’

Spring Statement heralds the ‘light at the end of the tunnel’

Chancellor Philip Hammond has presented his first Spring Statement, with something of a spring in his step.

Responding to the latest economic forecasts from the Office for Budget Responsibility, Mr Hammond revealed that the economy is expected to grow at the slightly faster rate of 1.5% in 2018.

Debt and borrowing have been revised downwards, and inflation is also predicted to fall back down to the Bank of England’s 2% target over the coming 12 months. The Chancellor suggested that the UK’s public finances have reached a ‘turning point’.

While openly challenging his own reputation as a pessimist, the Chancellor rejected calls to ease the squeeze on spending, asserting that UK debt remains ‘too high’ and heralding the government’s ‘balanced approach’. However, he did pave the way for potential increases in public spending from 2020 onwards, revealing plans for a detailed Spending Review in 2019.

Mr Hammond also used the Spring Statement to report on the progress made on a number of the measures previously announced at the Autumn Budget.

Having previously announced that business rates revaluations will take place more frequently, the Chancellor has now brought forward the next revaluation by a year, to 2021. He also revealed that an estimated 60,000 people have so far benefitted from the stamp duty land tax exemption introduced for first-time buyers in the Autumn Budget.

With Brexit negotiations ongoing, the Chancellor confirmed that over £1.5bn has been allocated to departments and devolved administrations in preparation for the UK’s exit from the EU. He also announced the first allocation of funding from the Challenge Fund, which will provide money to support the roll out of full-fibre broadband to 13 areas of the UK.

The Chancellor also committed more than £500m a year to support the new post-16 T-Levels, with £50m a month being made available to help employers prepare for T-Level work placements.

Turning to future changes to the tax system, the Chancellor launched consultations on a number of key areas, including the impact of the VAT registration threshold on small businesses, tackling single-use plastic waste, and new incentives to encourage the ‘great British white van driver’ to go green.

IoD publishes list of business predictions for 2018

IoD publishes list of business predictions for 2018

The Institute of Directors (IoD) has published a list of 14 business and economic predictions for 2018.

Image result for institute of directors publishes list of predictions for 2018In its publication, the IoD predicts that 2018 will be a year of ‘great change&squo; for UK companies. The business group’s predictions cover a range of key issues, such as taxation, Europe and trade, employment and the UK economy.

It speculates that the Treasury will attempt to tax self-employed individuals ‘more like employees’, and predicts that Chancellor Philip Hammond will launch a consultation on the matter in the 2018 Autumn Budget.

The IoD also predicts that, by March, the UK and the EU will have reached an agreement on transitional Brexit arrangements, and a written commitment will be made.

Meanwhile, the number of companies being formed will ‘continue to rise’ in 2018, the Institute speculates. Its latest survey on confidence amongst business start-ups revealed that UK entrepreneurs are entering into 2018 with a ‘positive attitude’ towards investment in their firm.

Commenting on the predictions, Edwin Morgan, Interim Director of Policy at the IoD, said: ‘2018 will be another big year for business. The ongoing Brexit negotiations will be playing on many business leaders’ minds, but it would be a mistake to think it’s the only show in town.

‘By the end of 2018, if decent progress is made in the Brexit talks, companies will hopefully be able to look forward to the coming years with greater clarity and positivity about where the UK is going.’

The IoD’s full list of predictions can be found here.

Autumn Budget stamp duty changes will have ‘modest impact’, says lender

Autumn Budget stamp duty changes will have ‘modest impact’, says lender

In a new report, building society Nationwide has stated that the Autumn Budget changes to Stamp Duty Land Tax (SDLT) for first-time homebuyers will have only a ‘modest impact’ on housing demand.

Image result for Autumn Budget stamp duty changes will have modest impact says lenderChancellor Philip Hammond abolished SDLT for first-time homebuyers in England, Northern Ireland and, temporarily, for those in Wales, from 22 November. The abolition applies for individuals seeking to purchase a first home worth up to £300,000. Wales will receive devolved stamp duty powers in April 2018, when its Land Transaction Tax (LTT) comes into effect.

To assist those in London and other expensive regions, the first £300,000 of the price of a home valued at £500,000 will be exempt from SDLT for first-time homebuyers.

Different rules apply in Scotland, where the Land and Buildings Transaction Tax (LBTT) is applicable.

Commenting on the report, Robert Gardner, Chief Economist at Nationwide, said: ‘The decision in the Budget to abolish stamp duty for first-time buyers purchasing a property up to £300,000 (with relief for those purchasing a property up to £500,000) is likely to have only a modest impact on overall demand.

‘In many regions, first-time buyers already paid little or no stamp duty as the price of the typical first-time buyer property was below the previous threshold of £125,000.’

Meanwhile, the Office for Budget Responsibility (OBR) warned that the abolition of SDLT for first-time buyers could result in higher house prices, as prospective buyers will have more money to put towards a deposit.

Motorists ‘less likely to choose diesel cars’ following Autumn Budget tax changes

Motorists ‘less likely to choose diesel cars’ following Autumn Budget tax changes

A survey carried out by CLM Fleet Management has suggested that UK drivers are less likely to purchase diesel cars, following tax changes made by Chancellor Philip Hammond in the recent Autumn Budget.

Image result for Motorists 'less likely to choose diesel cars' following Autumn Budget tax changesThe Chancellor announced that, for new diesel vehicles registered after 1 April 2018 that do not meet the Real Driving Emissions 2 (RDE2) standard, a supplement will be charged on their First Year Rate, to the effect of moving up by one Vehicle Excise Duty (VED) band.

After the first year, vehicles with zero emissions will be exempt from the standard rate of vehicle tax, and other petrol or diesel vehicles will pay a standard rate of £140 a year. An additional rate will be added to the vehicle tax for all new vehicles with a list price of over £40,000.

59% of survey respondents stated that they would be less likely to purchase a diesel car as a result of the increase in VED from April 2018.

The Chancellor also announced that the diesel supplement will be increased from 3% to 4% from 6 April 2018, but will be removed altogether for diesel cars which are certified to the RDE2 standard.

The CLM survey also quizzed respondents over this increase: 62% said that the change will not impact upon their buying decision, with a further 17% stating that they would be less likely to choose a diesel car.

Commenting on the findings, John Lawrence, Managing Director of CLM Fleet Management, said: ‘We have already seen a steep decline in diesel sales this year as drivers have reacted to negative publicity around poor air quality and diesels. And these latest announcements look set to accelerate that process.’