21stJun
News article

Rate decision disappointing for small businesses

The Bank of England's decision to hold interest rates was disappointing for small businesses, says the Federation of Small Businesses (FSB).

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The Bank of England's decision to hold interest rates was disappointing for small businesses, says the Federation of Small Businesses (FSB).

Interest rates have been held at 5.25% and remain at their highest level for 16 years.

The Bank of England had been widely expected to keep rates unchanged despite a further slowdown in inflation.

The bank's monetary policy committee (MPC) voted by a majority of seven to two to keep rates unchanged.

It is the seventh time in a row that interest rates have been left unchanged.

Martin McTague, National Chair at the FSB, said: 'Yet again, the MPC has opted to stick instead of twist, a move which was widely predicted but which is no less disappointing for it.

'The high plateau rates are currently stuck at is now undermining growth, as small firms struggle to access affordable finance to help them expand.

“Inflation is now back on target, and holding off a cut in the base rate until a future date risks snuffing out tentative signs of a recovery in GDP, with the flat growth in April a warning sign.

'Even with services inflation coming in higher than expected yesterday, the danger posed by stifling growth must not be ignored, as doing so will have potentially devastating consequences for small businesses.'

20thJun
News article

UK's investment performance 'worse than every other G7 country'

Data published by think tank the Institute for Public Policy Research (IPPR) has found that the UK's investment performance is worse than every other country in the G7.

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Data published by think tank the Institute for Public Policy Research (IPPR) has found that the UK's investment performance is worse than every other country in the G7.

It found that, compared to the USA, Germany, France, Italy, Canada and Japan, the UK 'languished' in last place for business investment in 2022.

The IPPR also revealed that the UK has been bottom of the G7 league for investment in 24 out of the last 30 years. It said that the UK has the lowest rates of investment of any G7 economy, and that it ranks 28th out of 31 Organisation for Economic Co-operation and Development (OECD) countries for business investment. 

According to the IPPR, countries such as Hungary, Slovenia and Latvia attract higher levels of private sector investment than the UK as a percentage of GDP.

Dr George Dibb, Associate Director for Economic Policy at the IPPR, commented: 'If the economy is an engine, then investment is its fuel. The UK's dire productivity performance is the single biggest driver of our dire living standards. Without resources flowing into new investment, it's hard to see how UK economic performance can improve.'

19thJun
News article

Inflation at lowest level in almost three years, data shows

Data published by the Office for National Statistics (ONS) has revealed that the UK inflation rate has fallen to its lowest level in almost three years.

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Data published by the Office for National Statistics (ONS) has revealed that the UK inflation rate has fallen to its lowest level in almost three years.

According to the data, prices rose by 2% in the year to May, down from 2.3% in April.

The ONS data showed that whilst prices are still rising, they're increasing at their slowest pace since July 2021.

The latest inflation data comes ahead of a Bank of England interest rate decision due on Thursday. Many experts expect the Bank to hold interest rates at their current level of 5.25%.

Responding to the data, David Bharier, Head of Research at the British Chambers of Commerce (BCC), said: 'Today's data showing CPI easing to the Bank of England's 2% target, is a further sign that the UK is exiting the inflation crisis which began in late 2020. It provides additional weight for an interest rate cut in the coming months, something which will be welcomed by firms of all shapes and sizes. 

'Our research has shown that a steadily declining number of businesses are concerned about inflation, from a record peak of 84% in mid 2022. This is positive news, but prices are not falling, just rising more slowly, and the economic outlook remains challenging.'

18thJun
News article

HMRC 'has not fined a single 'enabler' of offshore tax evasion', data reveals

A Freedom of Information (FOI) request has revealed that HMRC has not fined a single 'enabler' of offshore tax evasion in five years.

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A Freedom of Information (FOI) request has revealed that HMRC has not fined a single 'enabler' of offshore tax evasion in five years.

The revelation comes despite HMRC having landmark powers, which were introduced in 2017, to impose hefty fines.

The data, which was released to the Bureau of Investigative Journalism (TBIJ), suggests that HMRC is failing to target the creators of offshore tax evasion schemes and instead pursues clients of such schemes. According to the FOI request, HMRC has not fined a single partnership or company for enabling tax evasion since the change in the law in 2017.

Commenting on the matter, Dan Neidle, founder of think tank the Tax Policy Associates, said: 'The never-ending stream of new HMRC powers . . . are pointless if the powers aren't then used.'

A spokesperson for HMRC stated: 'We have a strong track record in tackling offshore noncompliance. Since the launch of our 'no safe havens' strategy in 2019, we have secured almost £700 million from offshore initiatives.'

17thJun
News article

HMRC collected £1.39 billion in unpaid inheritance tax in last five years, data shows

Data published recently by HMRC has shown that it collected £1.39 billion in unpaid inheritance tax (IHT) in the last five years.

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Data published recently by HMRC has shown that it collected £1.39 billion in unpaid inheritance tax (IHT) in the last five years.

According to the figures, HMRC recovered £285 million in unpaid IHT in the last tax year. The data also revealed that, since 2019, HMRC has initiated nearly 20,000 investigations into deceased individuals' estates where underpayment of IHT was suspected.

When a person dies IHT becomes due on their estate. IHT can also fall due on some lifetime gifts but most are ignored providing the donor survives for seven years after the gift.

The rate of tax on death is 40% and 20% on lifetime transfers where chargeable. Currently, the first £325,000 is chargeable to IHT at 0% and this is known as the nil-rate band.

Sean McCann, Financial Planner at insurer NFU Mutual, said: 'HMRC leaves no stone unturned in these investigations. For example, they will look at outgoings such as gifts made in the seven years before death, or premiums for life insurance policies which if not written in trust will form part of the taxable estate.

'In addition, the interest rate you pay on overdue inheritance tax stands at 7.75%, which is the highest rate for 30 years, and can add a significant amount to the bill.'

14thJun
News article

Next government 'should extend company car benefit in kind taxation tables'

The next government should prioritise extending the company car benefit-in-kind (BIK) taxation tables, the Association of Fleet Professionals recently stated.

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The next government should prioritise extending the company car benefit-in-kind (BIK) taxation tables, the Association of Fleet Professionals recently stated.

The Association said that it has been two years since the current company car BIK tax tables were announced and they run only until the 2027/28 tax year. It stated that companies ordering vehicles today don't know the tax rate drivers will be charged at the end of this decade.

It has urged the next government to settle company car tax until 'at least' the 2029/30 tax year.

Paul Hollick, Chair of the Association of Fleet Professionals, said: 'There's been something of a structural change in recent years, with the popularity of electric company cars on fleets meaning businesses have started operating longer replacement cycles to help offset their higher purchase cost, rising from typically three years to four or five.

'This means that we need the benefit in kind tables to extend longer into the future than was previously the norm.'

13thJun
News article

'Stark economic challenge' facing whoever wins election

Think tanks and business groups have warned that whoever wins the General Election faces a 'stark economic challenge' as a result of faltering growth.

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Think tanks and business groups have warned that whoever wins the General Election faces a 'stark economic challenge' as a result of faltering growth.

Data published recently by the Office for National Statistics (ONS) revealed that the UK economy failed to grow in April.

The ONS data showed that construction output fell by 1.4% in April 2024, its third consecutive monthly fall. Output in services for consumers also fell by 0.7%.

Commenting on the data, James Smith, Research Director at the Resolution Foundation, said: 'After a strong start to the year, falling retail sales and contracting manufacturing output have brought growth to a halt in April. The latest data offers a snapshot of Britain's wider growth challenge, and should remind politicians that ending stagnation should be the central task of whoever wins the next election.'

Meanwhile, David Bharier, Head of Research at the British Chambers of Commerce (BCC), said: 'Many businesses we speak to are still held back by skills shortages, high borrowing costs, and trade barriers with the EU. Sectoral performance remains very imbalanced, with retail and hospitality sectors consistently reporting weaker growth.

'With unemployment rising and inflation slowing, pressure will be growing on the Bank of England to cut the interest rate.' 

12thJun
News article

Next government needs to prioritise falling employment, says think tank

Think tank the Resolution Foundation has warned that the next government will need to tackle the problem of falling employment, not falling inflation.

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Think tank the Resolution Foundation has warned that the next government will need to tackle the problem of falling employment, not falling inflation.

The think tank warned that the UK labour market 'continues to cool' with the employment rate only just above its mid-pandemic low point.

It stated that the UK unemployment rate has increased for four months in a row from 3.8% in the final quarter of 2023 to 4.4% in the three months to April 2024.

Economic inactivity also increased to 22.3% and long-term sickness reached a record high of 2.83 million.

Commenting on the matter, Nye Cominetti, Principal Economist at the Resolution Foundation, said: 'The labour market has continued to cool in early 2024, with both unemployment and inactivity up. Worryingly, the UK employment is closer to its mid-pandemic lows, than its pre-pandemic highs.

'Turning around this poor performance, and kickstarting the kind of jobs growth Britain experienced in the 2010s will be a key task for the next government.'

11thJun
News article

Tax changes since 2010 have 'adversely affected families with children'

Research carried out by the Institute for Fiscal Studies (IFS) has suggested that families with children were hit the hardest by tax and benefit changes since 2010.

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Research carried out by the Institute for Fiscal Studies (IFS) has suggested that families with children were hit the hardest by tax and benefit changes since 2010.

The IFS said that, among the 7.6 million households with children, changes to the tax and benefit system have reduced entitlements by £2,200 per year, on average. It stated that, taken as a whole, tax and benefit reforms since 2010 have reduced incomes for the poorest 40% and the richest 10% of UK households.

According to the IFS, a small number of families will have benefitted from increased childcare provision, but nowhere near enough to offset the effect of cuts to benefits.

Tom Waters, Associate Director at the IFS, commented: 'There has been a steady shift over the past 14 years from cash support for families with children to in-kind support through childcare. But the latter only offsets a small fraction of the former. Taken together with other benefit reforms, this has led to big declines in support for the poorest households.'

10thJun
News article

Savers 'dangerously underestimating' minimum cost of retirement

Research carried out by pension provider Pension Bee has suggested that UK savers are 'dangerously underestimating' the minimum amount needed to retire.

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Research carried out by pension provider Pension Bee has suggested that UK savers are 'dangerously underestimating' the minimum amount needed to retire.

A survey of 1,000 savers carried out by Pension Bee showed that 23% were unsure of the total pension pot size needed to achieve the retirement income they desire.

Pension Bee said that, according to the Pensions and Lifetime Savings Association's (PLSA) Retirement Living Standards, a pension pot of £150,000 would only fund an individual's minimum retirement standard for ten years. Pension Bee suggested that working-age adults could be underestimating the true cost of retirement.

49% of those polled estimated that they would require a pension pot of around £250,000 or more. However, Pension Bee found that, generally, the survey showed that there was a lack of clear consensus in regard to desired annual income in retirement.

Becky O'Connor, Director of Public Affairs at Pension Bee, said: 'It's hard to plan for retirement without an idea of how much you might need, yet most Brits seem to be unaware of - or worse, dangerously underestimate - the true cost of retirement.

'A good pension pot is one that can provide enough money for the duration of retirement. As this exact amount will vary based on individual circumstances, pension calculators can be a helpful tool in setting financial goals and adjusting behaviours to achieve them.'