BUSINESS
Insolvency experts have claimed the Government faces a 'ticking time bomb' of company closures and job losses when HMRC winds up its scheme to allow firms to delay their tax payments.
Independent 8.2.10
The Government has not said when it plans to close its Business Payment Support Service yet. It is pure speculation to say this will happen after the general election – and it is unlikely that HMRC will demand immediate payment when the scheme does close.
Gordon Brown has claimed that the world's leading economies are close to agreeing a global bank tax. In related news, a coalition of charities, unions and aid agencies have called on the UK's political parties to support a global 'Robin Hood tax' on financial transactions.
Financial Times 11.2.10; Telegraph 8.2.10; Independent, Guardian & Times [not online] 10.2.10
These stories relate to the Tobin tax that the PM has been mooting for a while. Although support for the levy is growing within other administrations and various organisations, there is still a long way to go before it becomes a reality. For it to work effectively it needs support globally – and particularly from the USA, which has its own plans for taxing the finance sector.
The Premier League will attempt to broker a deal with HMRC on behalf of its football clubs and players, to protect their sponsorship deals and prevent the loss of up to £100 million in taxes.
Financial Times 8.2.10
Whenever an employer is making payments into a company related to one of its employees, HMRC are likely to be asking whether this is disguised remuneration. Advisers will want to be clear that a large PAYE liability is not accruing, particularly when acting on behalf of the payer. Portsmouth watch out!!!
GENERAL
The prime minister has refused to rule out a compulsory 'death tax' to pay for the care of elderly people who can no longer look after themselves.
Telegraph & Guardian 11.2.10; Telegraph 10.2.10; Guardian 9.2.10
An aging population means paying for care for the elderly is one difficult issue that won’t go away. Labour has proposed a 'tax on death', while the Conservatives have mooted an insurance-type scheme. Payment under either plan would seem likely to depend on a client’s physical health rather than their financial health – and as such may be difficult to advise upon.
Families who build flats for their grandparents could get tax breaks of up to £20,000 under proposals being considered by the Centre for Social Justice, a centre-right thinktank.
Times 6.2.10
The idea appears to be to exempt extensions from capital gains tax when the property is sold. However, main residence relief may already be due if the extension or granny flat is an intrinsic part of the property and could not be sold separately.
Tax breaks for private healthcare and new charges or co-payments for NHS services will have to be considered by the next government, according to Adrian Fawcett, chief executive of BMI, Britain's biggest private hospital group
Financial Times 12.2.10
Tax relief was available to the over 60s under the previous Conservative administration, but this was abolished by the Labour party when it came to power. Neither party currently has plans to introduce tax relief for private health insurance, saying they are committed to providing care under the NHS.
Millions of taxpayers could lose up to £2,500 a year due to a computer error at HMRC, while company cars or private health insurance could be taxed twice.
Mail 7.2.10
IT IS IMPORTANT to check notices of coding. The homepage of HMRC’s website currently explains what taxpayers should do if they think their code is incorrect. Another shining example of how HMRC seem intent on incompetence.
UK families in which only one married parent works are being unfairly penalised by the tax system, compared to those in other developed countries, according to CARE, a Christian social policy charity
Telegraph 2.2.10
The Conservatives say they wish to address the position of families with one working parent – for example, by offering tax breaks – should they win the general election.
GREEN TAXES
The Environmental Audit Committee is calling on the Government to introduce measures such as a new carbon tax to push the price of carbon from its level of £13 a tonne to what the MPs see as a more credible price of £88.
Guardian 8.2.10
The recession has resulted in a fall in the price of carbon, but this is likely to rise as the economy returns to growth. The scheme has its faults, but the overall cap on carbon emissions is due to start falling, which should exert upward pressure on the price of credits.
Ministers could save £12 billion of public spending over four years by clamping down on tax breaks for polluting oil exploration, cement, aluminium and transport, according to the Green Alliance thinktank.
Guardian 8.2.10
Green taxes could be a helpful way of building the Government’s finances, but they could be difficult to impose. Given that the Treasury has recently provided a new tax break for gas exploration in the west of Shetland area, it seems unlikely such reliefs will be withdrawn.
INCOME TAX
Wealthy families are being urged to snap up a little-used tax break by making pension contributions for non-working spouses and children, amid fears that the relief will be scrapped in the next Budget.
Financial Times 6.2.10
The run-up to the Budget has for many years featured fears about restrictions to tax relief on pension contributions. With recent restrictions on higher-rate relief, and a desperate need for increased tax revenues, abolishing the relief on pension contributions for the non-working spouses and children of the wealthy may become a reality.
Far-reaching reform of tax incentives for charitable giving has been abandoned by the Treasury, in spite of calls from charities for a change to the gift aid system.
Financial Times 9.2.10
The Treasury will be reluctant to make changes to gift aid, which the department regards as successful – and it is likely to fear that alterations to the scheme would have an adverse effect on government finances.
INVESTMENTS
High earners caught by limits on pension tax relief are expected to double the amount of money put into venture capital trusts (VCTs) this year – but analysts warn that these investments in small businesses will become riskier under new regulations.
Financial Times 6.2.10
VCTs can form part of an investment strategy, especially for wealthier clients, but, advisers should be wary of suggesting these riskier investments as a direct alternative for pensions.
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