News round up… October
W/C 25th October
ISAs gain popularity as purse strings tighten
A report by Halifax has revealed that Individual Savings Accounts (ISAs) have significantly gained in popularity since they were introduced in 1999. The average cash ISA balance is £7,782, almost a third of average annual earnings. The biggest savers are in Derbyshire Dales with tax-free savings averaging £10,476, while the London boroughs of Hackney and Southwark fall way below the national average at £4,675 and £4,791 respectively. Those over the age of 75 hold the highest average balance, which Halifax economist Nitesh Patel said ‘underscores that it is not just the younger generation who are financially savvy.’
Treasury strikes deal with Switzerland
Britain has struck a deal with Swiss authorities in a move that could see the Treasury claw back billions of pounds of tax from people hiding assets in Swiss bank accounts. In a landmark deal, Switzerland has agreed to work within international standards helping to track tax avoiders. Swiss authorities will impose the tax, which may include monies from the past as well as future, and hand it back to the UK. However, the rate has yet to be decided, with negotiations only just beginning. Full talks begin early next year.
W/C 18th October
New pensions tax relief a 'BOGOF for the super-rich'
The coalition government has announced it will scrap the former government’s plans to reduce tax relief to 20% for those earning above £150,000. This means 274,000 of the highest-rate taxpayers will now receive 50% on their contributions. Currently earnings of £250,000 can be placed in tax-free pensions, but that is set to be reduced to £50,000 from April 2011. The government claims that the cost-cutting measures would slash £4bn off the £19bn it currently spends a year on pensions tax relief. Tom McPhail, head of pensions at Hargreaves Lansdown described the move as ‘the lesser of two evils’, while TUC general secretary Brendan Barbour said, ‘It's a pension BOGOF for the super rich - buy £1 and get £1 free - courtesy of hard-working ordinary tax payers.’
Carer grandparents entitled to basic state pension
Grandparents who give up work to care for grandchildren under the age of 12 will benefit from a basic state pension, according to proposed changes in the government’s National Insurance contributions review. Currently, if a grandparent of working age leaves work to look after grandchildren before they have contributed enough to receive a basic pension, they can lose out on retirement money. Minister for Pensions Steve Webb said, ‘I have supported the idea of a Grandparents' Credit for many years. For too long the vital childcare that grandparents provide so that parents can work has been overlooked by the system.’ Should they go ahead, the changes would be implemented from April 2011 and would affect around 250,000 grandparents.
W/C 11th October
Lap dancer is 'tax exile'
A lap dancer attempting to sue Stringfellows for unfair dismissal has been living as a tax exile, according to claims. An employment tribunal heard that HM Revenue and Customs had no record of Nadine Quashie, who claims to have been unfairly sacked from her job. According to Casper Glyn acting on behalf of the London club, if Quashie is proved to have been misrepresenting her tax affairs, she should not be permitted to pursue her case against Stringfellows.
Ed Miliband criticises benefit blow
In his first appearance at prime minister’s questions, Ed Miliband struck a mighty blow to the Child benefit reforms announced by the coalition. The Labour leader described PM David Cameron’s plans to scrap the benefit for higher earners as a ‘shambles’. Criticising the impact the changes will have on middle-income families, he said, ‘If he wants to take people with him on deficit reductions, he has got to show that his changes are fair and reasonable. I don’t believe this changes are fair and reasonable. Does he?’
W/C 4th October
Child benefit overhaul hits higher taxpayers
Chancellor George Osborne has announced that the government plans to axe child benefits for higher-rate taxpayers from 2012. In a move he described as ‘tough but fair’, he revealed that families where one parents earns around £44,000 would no longer be for eligible for benefits. Speaking at the Conservative conference, Mr Osborne said the cutbacks would save £1bn a year. TUC general secretary Brendan Barber criticised the proposal, saying, ‘This is a big blow to the principle that has served Britain well for decades that welfare should be available to all, not just the poorest.’
Council tax rebates for volunteers
People who volunteer as special constables may be offered council tax rebates, under proposals to reward ‘good citizens’. The Association of Chief Police Officers (ACPO) submission comes as a response to the ‘Policing in the 21st Century’ and is currently being considered by the government. Tax rebates would be just one of numerous incentives for community volunteers as suggested by ACPO. Other proposals include a loyalty card scheme and civic medals. A Home Office spokesman said, ‘The Government values greatly the work done by special constables and is keen to encourage more people to become specials, volunteers and to take an active role locally such as with community crime fighters.’
UK tax forces Wolseley abroad
FTSE 100 company Wolseley has announced it is to relocate to Switzerland after the government failed to provide a ‘clear enough view’ on the overhaul of the UK’s corporation tax regime. The heating and plumbing group, which makes 81% of its revenues overseas, has said it is making the move because of Britain’s controlled foreign companies (CFC) tax regime. Wolseley chief executive Ian Meakins said, ‘We have had serious engagement with the authorities and HMRC. They have been as helpful as they possibly could be because, fundamentally, we don't want to go. It's simply a question of creating value for shareholders.’