‘Record amount’ of tax collected by HMRC

‘Record amount’ of tax collected by HMRC

A ‘record amount’ of tax has been collected by HMRC, official data has revealed.

The data showed that, in the year to April 2018, HMRC collected a total of £605.8 billion in taxes – an increase of 5.4% when compared to the figure recorded in the previous year.

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Of this total amount, £186 billion was collected in income tax; £130.5 billion in national insurance contributions (NICs); £128.6 billion in VAT; and £53.3 billion in corporation tax.

The amount collected in capital gains tax (CGT), however, fell by 7.1% as a result of the reduction in CGT rates from 18% to 10%, where an individual is not a higher rate taxpayer.

The data also revealed that HMRC secured £30.3 billion by tackling tax avoidance and evasion, and that 15 million taxpayers are actively using their Personal Tax Accounts (PTAs) to manage their taxes online.

Commenting on the data, Jon Thompson, First Permanent Secretary and Chief Executive at HMRC, said: ‘HMRC has a vital purpose, and that is to collect the revenues that pay for public services, and to provide targeted financial support for those in our society.

‘Last year, HMRC had a great year. Record revenues, record compliance yield, record numbers of people prosecuted for tax evasion, and performing strongly for customers up and down the country.’

As your accountants, we can help you plan for a prosperous future, while keeping the tax bill to a minimum. Please contact us for more information.

OBR warns tax rises will be required to fund health service spending

OBR warns tax rises will be required to fund health service spending

In its latest Fiscal Sustainability Report (FSR), the Office for Budget Responsibility (OBR) has warned that tax rises or spending cuts will be required in order to fund planned increases in the NHS budget.

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The government recently outlined plans to boost its health budget partly by way of a so-called ‘Brexit dividend’ – by 2023/24, it hopes to contribute £20 billion a year to the NHS in England. However, according to the OBR, Brexit is ‘more likely to weaken than strengthen’ public finances.

Responding to the OBR’s warning, the Treasury said: ‘The government will fund this five-year commitment while continuing to meet its fiscal rules and reduce debt. Taxpayers will need to contribute a bit more in a fair and balanced way.’

Within its report, the OBR also stated that public finances are ‘likely to come under significant pressure’ in the long-term, as a result of the UK’s ‘ageing population’ and ‘upward pressure on health spending’.

The fiscal watchdog revealed that the current long-term outlook for UK public finances is now ‘less favourable’ than at the time when its last FSR was published in January 2017.

Business confidence ‘reaches two-year high’, research suggests

Business confidence ‘reaches two-year high’, research suggests

Research carried out by Lloyds Bank has revealed that confidence amongst UK firms has ‘reached a two-year high’.

The Bank’s confidence index rose from 23% in January 2018 to 25% in the second quarter of this year, and is now ‘above the long-term average’. UK businesses are now ‘more confident than at any point since the EU referendum vote’, according to Lloyds Bank.

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It did, however, warn that Brexit uncertainty poses ‘the greatest threat to business confidence’ in the short-term, alongside ‘weaker UK demand’. 36% of firms ‘expect a negative impact on their business’ if the government fails to reach a trade agreement with the EU.

The research also suggested that many firms are choosing not to put additional recruitment and investment plans into place.

‘Despite concerns on the wider economy, businesses are still relatively upbeat, as our latest report shows business confidence hitting a two-year high since the Brexit vote,’ said Sharon Geoghegan, Managing Director of SME Banking at Lloyds Banking Group.

‘As we look ahead, the external environment remains mixed, as Brexit uncertainty and weaker UK demand are businesses’ biggest concerns for the next six months.’

FRC publishes new Corporate Governance Code

FRC publishes new Corporate Governance Code

The Financial Reporting Council (FRC) has published a revised Corporate Governance Code, which ‘emphasises the importance of positive relationships between companies, shareholders and stakeholders’.

The new Code states that relationships between companies, shareholders and stakeholders are ‘at the heart’ of long-term growth in the UK economy, and beseeches businesses to ‘create a culture which aligns company values with strategy’.

A number of changes have been made to the Code, including a new provision to promote board engagement with the workforce in order to understand employees’ views, and an emphasis on the need to refresh boards and carry out succession planning.

‘To make sure the UK moves with the times, the new Code considers economic and social issues, and will help to guide the long-term success of UK businesses,’ said Sir Win Bischoff, Chairman of the FRC.

‘This new Code, in its new shorter and sharper form, and with its overarching theme of trust, is paramount in promoting transparency and integrity in business for society as a whole.’

The Institute of Directors (IoD) praised the new Code. Dr Roger Barker, Head of Corporate Governance at the Institute, stated: ‘The IoD welcomes the publication of the revised UK Corporate Governance Code, particularly its engagement with a wider range of stakeholders, including the workforce, as well as encouragement of more long-term oriented business behaviour and recognition of the board’s role in overseeing a company’s purpose and culture.’

The new Corporate Governance Code can be read in full here.

Government urged to ‘pick up the pace’ in regard to Apprenticeship Levy reform

Government urged to ‘pick up the pace’ in regard to Apprenticeship Levy reform

The Confederation of British Industry (CBI) has urged the government to ‘pick up the pace’ in regard to its reform of the Apprenticeship Levy initiative.

Introduced in April 2017, the Apprenticeship Levy has changed the way in which apprenticeships are funded: larger employers are required to invest a percentage of their annual pay bill in apprenticeships. The Levy is 0.5% of the pay bill, but there is an annual allowance of £15,000. It is reported and paid using the Pay as You Earn (PAYE) process.

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The CBI’s statement comes following the recent publication of the latest Apprenticeship Levy statistics, which have revealed that, between August 2017 and April 2018, there were 290,500 apprenticeship starts – a fall of 34% when compared to 2016/17’s figure of 440,300.

The government is committed to achieving its target of creating three million apprenticeships in England by 2020.

Commenting on the statistics, John Cope, Head of Education and Skills at the CBI, said: ‘This stark drop in apprenticeship starts serves as a reminder that the Apprenticeship Levy is not working as intended. If we don’t significantly reform the Levy quickly, companies will find it harder to invest in the quality apprenticeships and skills training they value so highly.’

Meanwhile, the Institute of Directors (IoD) also warned that, if take-up of the Levy continues to be low, it ‘does not look possible for the government to meet its target’. The IoD added that ‘it’s now time for the government to rethink its approach and work with businesses’ in order to successfully reform the Levy.

Business groups respond to publication of Brexit White Paper

Business groups respond to publication of Brexit White Paper

Business groups, including the Confederation of British Industry (CBI), the British Chambers of Commerce (BCC) and the Institute of Directors (IoD) have responded to the government’s recent publication of its Brexit White Paper.

The 104-page document is divided into four chapters, which focus on security, economic partnership, co-operation and institutional arrangements.

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A commitment to build a ‘new relationship that works for both the UK and the EU’ has been outlined by the government within the White Paper, alongside proposals for future trade arrangements.

Responding to the publication of the Paper, the CBI stated that many of the government’s intentions in regard to Brexit are ‘reassuring’. Carolyn Fairbairn, Director General of the CBI, said: ‘The Brexit White Paper reflects much of the evidence that business has been highlighting since the Referendum.

‘Businesses on both sides have been asking for frictionless trade between the UK and the EU, and shared rules could go a long way towards delivering that. It is now the EU’s turn to put economics before ideology on these proposals.’

Meanwhile, Stephen Martin, Director General of the IoD, said that EU negotiators ‘now have specific details to build upon’, and urged them to ‘respond constructively’.

The BCC, however, gave a decidedly lukewarm response. Dr Adam Marshall, its Director General, commented: ‘Businesses still need clear and detailed answers on many of the practical, real-world questions they face. Many of these answers can only emerge through negotiations – so it’s time for the two sides to crack on and get to a deal.’

UK pensioners ‘pay an average annual tax bill of £3,500’, research reveals

UK pensioners ‘pay an average annual tax bill of £3,500’, research reveals

An analysis carried out by insurer Royal London has revealed that the average annual tax bill for taxpayers over the state pension age totals £3,522.

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Royal London used the Freedom of Information Act to collect data on taxpayers over the state pension age from local authorities in the UK. The last year for which detailed figures were available was for the tax year 2015/16, and the analysis revealed that:

  • 3.87 million men pay an average annual bill of £4,341, while three million women pay an average bill of £2,467
  • more than a quarter of tax-paying pensioners are still in paid work: 1.5 million individuals have employment income, whilst 0.5 million have income from self-employment
  • UK pensioners paid a total of £24 billion in income tax in 2015/16, of which £21 billion came from England, £1.7 billion came from Scotland, £0.8 billion from Wales and £0.4 billion from Northern Ireland.

Commenting on the analysis, Steve Webb, Director of Policy at Royal London, said: ‘Many people might assume that, once you retire, you cease to be of interest to the taxman, but these figures show this is very far from being the truth. The number of tax-paying pensioners has nearly doubled in the last two decades.

‘When planning for retirement, it is vital to remember that the tax office will still want a slice of your income, which reinforces the need to put aside enough to secure a decent standard of living, even after the taxman has had his slice.’