UK Rich Lose More than The Poor
Posted: 11/08/2010 Filed under: Investment, Moving to London, UK Company Set Up, VAT, VAT Registration | Tags: business concerns, corporation tax, Small Business, VAT Leave a comment »In latest polls, it has come to light that the recession is costing the wealthiest house holds more than that of less ‘well off’ ones. This is something that should please most people as it is a favorite hobby horse of many that conservative governments take money out of the pockets of the poorer members of society. It seems this time they are taking money from everyone’s pockets with rises in VAT and such like.
Which is, of course, as it should be.
The ‘best off’ group, usually headed by someone aged between 55 and 74, with a degree, have took a blow recently losing £25,000 of their total wealth between 2007 and the autumn of 2009.
Whereas the less well off house holds, headed by people under the age of 35 with no qualifications, have felt a smaller blow of just £2,000, during the same period. Of course it does need to be pointed out that it is all relative and the percentage of income earned is probably the relevant figure here.
Clearly the lower earning households felt less of a blow when it came to the recession due to the fact they had less wealth to begin with. It is also being said that the fact that they had stored their assets in more stable places such as banks and building societies (we are talking comparatively here). As opposed to the wealthier households who invest their wealth in places with more uncertain stability such as the stock market.
This study was held by the Institute of Fiscal Studies, or the IFS and commissioned by the Department for Work and Pensions. The study was held to aid research into how households lack of confidence could shake the already fragile economy, not aid its recovery.
There is no doubt, however, that as focused as we may be on pulling the UK up by its bootstraps we must never lose sight of the fact that we are all in it together. Any society that neglects its more vulnerable members risks losing something much more valuable than cash. It risks losing its humanity.
OK I will jump off my soapbox now.
Inflation Up But Interests Stay Down In the UK
Posted: 09/08/2010 Filed under: UK Taxation, Uncategorized, VAT, VAT Registration | Tags: business, business concerns, corporate tax, corporation tax, Small Business, UK tax, VAT Leave a comment »Inflation has been a hot topic in the media these past six months and I believe it can be strongly linked to the VAT rise from 17.5pc to 20pc in January. This may not be rocket science and perhaps it is something we may have to live with but it bears pointing out.
Tensions within the Bank of England Monetary Policy Committee will be “excruciating” for the next 18 months as strong economic data raises the pressure on policy-makers to raise interest rates, according to Peter Spencer, chairman of the Ernst & Young ITEM Club.
Inflation has grown faster than the Bank’s 2pc goal for 41 of the past 50 months and has averaged higher than 3pc for two years, prompting several letters of explanation to the Chancellor from Mervyn King, the Bank’s Governor. ITEM today says that inflation will remain above target until the end of 2011, largely as a result of the planned increase in VAT.
From May until June the GDP, gross domestic product (the measure of the countries overall economic output) growth was 1.1pc, the strongest in four years and far higher than expectations. This has added to pressure on policy-makers to raise rates from their historic low of 0.5pc, Bank policy-maker Andrew Sentance has already called for a rate rise for the past two months.
However, ITEM warns that rates will have to stay on hold until the start of 2014 if the economy is to be given a chance to recover. “The problem is that on the surface the economy looks to be inflating but once you delve deeper, you can see that the situation is very disinflationary,” Mr Spencer said.
So Britain are to hold out on the inflation rise. Staying at 0.5pc will help to build a stronger economy, even though the effects of the VAT rise are said to be felt shortly.
We’ll hang on in there and get through this tough time, coming out stronger and more prepared on the other side. Lower interest rates will help with this process and it will be a great relief to many households and small businesses that they are not set to rise. In my opinion a rise in VAT may turn out to be a small price to pay.
Are We Our Own Worst Enemy? VAT Rises.
Posted: 12/07/2010 Filed under: UK Investment, UK Taxation, VAT, VAT Registration | Tags: business concerns, corporation tax, Tax, UK tax, VAT Leave a comment »It looks as though us Britons are tightening our purse strings again, as we fear another recession backlash. It is said we fear a ‘double dip’ in the economic climate after the recent VAT increase to 20pc.
Being more careful about what we purchase, four in ten have said they wardrobe raided in order to recycle their old garments as opposed to buying new, up to date fashion.
According to the survey conducted by GfK NOP, a third of consumers claimed they had stopped dining out in order to save the pennies and credit cards are being used less for those luxury items we indulge upon.
It isn’t just the consumer-facing companies that seem to be threatened either, people are now changing their lifestyle choices, 6pc surveyed are postponing getting married and an equal amount are putting off having children until the threat has passed.
Ironically, the fear that has been created surrounded the second recession is, in fact, what just may cause the ‘double dip’. Our inclination as a nation to save during these times of ‘economic uncertainy’ could have a devastating effect in the long run.
It is my opinion that consumers should not be so over-cautious when considering the coming of the second recession.
If you are worried about the double dip (AGAIN) and want to discuss any aspect of your business, Please contact us here at St Matthew’s eAccounting. We know business in the uK
VAT The Big Issue
Posted: 04/06/2010 Filed under: Small Business, Uncategorized, VAT, VAT Registration | Tags: business concerns, corporate tax, corporation tax, UK tax, VAT Leave a comment »With the UK facing an almost certain rise in VAT in the coming months a few members of our business community are feeling the need to speak out and make their ideas known. This week it was Kingfisher chief executive and owner of B&Q, Ian Cheshire, who was compelled to tell us his thoughts on VAT in the UK. They made for interesting reading.
In essence what he is suggesting is that instead of the predicted rise in VAT, many are tipping it going to 20%, the government fill its coffers by extending the products to which VAT applies.
Mr Cheshire, like most of us acknowledges that tax rises are inevitable and even welcome in the face of our enormous deficit, but he expresses reservations about how the government plans on structuring these rises.
Mr Cheshire said: “Rather than reach for the default switch of increasing the standard rates, we should perhaps look at how the tax burden falls and take this opportunity to think about a slightly smarter form of tax — what we want to encourage and what we want to discourage.”
The example he uses is sugar, though junk food attracts VAT, sugar does not.
This kind of thinking puts him at odds with a lot of social commentators though who point out that as food takes up a bigger percentage of the disposable income of the poor they would suffer the most.
If you are wondering how rises in VAT or any changes in taxation will affect you then please contact us here at St Matthew’s eAccounting to talk it over.
Will VAT Rise Cause Job Losses?
Posted: 28/05/2010 Filed under: Uncategorized, VAT, VAT Registration | Tags: business, business concerns, Tax, Taxation, UK tax, VAT Leave a comment »As usual it depends on who you listen to as to whether or not you believe that a rise in vat in the UK will cause a fall in employment.
The British Retail Consortium has come out this week and claimed that the rise in Vat that is expected in the next budget will cause massive job losses from the retail sector. Their figures are dire and fairly scary. They say theat the predicted new VAT rate of 20 per cent would cost 163,000 workers their jobs and mean a consumer spending clamp down that would cost £3.6 billion over the next four years. That does sound grim.
As usual though ( and you cannot blame them) they are only seeing things from their point of view. They are urging the government to make cuts in the public sector instead of raising tax and they are doing so without a hint of irony. Despite the fact that public sector cuts would be sure to still result in large numbers of jobs being lost; just not in the area they are concerned about.
It seems that many experts think the BRC may be skewing a figures a little bit in order to make their case. I think that is natural. But I despite their scare tactics I think I am still leaning slightly towards the VAT rise being a good thing. But I am not yet completely convinced,
Interesting times ahead.
VAT is The Gorilla in the Room in Election
Posted: 04/05/2010 Filed under: UK election, UK Investment, UK Taxation, Uncategorized, VAT, VAT Registration | Tags: business concerns, corporate tax, Taxation, uk companies, UK tax, VAT Leave a comment »Sorry to be like everybody else and keep banging on about the election but if you are interested in the financial structure of the UK it is pretty hard to ignore at the moment. On the bright side it is nearly over and we can start talking about something else very shortly, but for now… There was an interesting article in the guardian this week regarding VAT and its place in the election.
The article was quoting the holy grail of think tanks the Institute for Fiscal Studies. In very diplomatic and polite terms the IFS made a statement this week that basically said that the parties were telling us fibs or at the very least putting a gloss on the truth. According to them we are facing four years of austerity and tax cuts under either party. Each will raise taxes and make cuts to pull Britain out of the deficit mire just the ration will change.
The Tories will have a ratio of 4 to in favour of cuts over taxes, Labour will do it at a ratio of 2 to 1 and the Lib Dems will fall somewhere in between. And no matter which party you elect Vat will rise.
Personally, and it may sound odd, I am not terribly concerned about any of this. Let’s do what is necessary to get our economy back on track.
Income tax To Remain At 20 Pence
Posted: 15/04/2010 Filed under: UK election, UK Taxation, VAT, VAT Registration | Tags: business, business concerns, corporate tax, corporation tax, Tax, tax refunds, Taxation Leave a comment »Income tax is another one of those emotive issues that seem to crop up every single election. The thing that astounds me is that politicians are silly enough to think that a promise to keep basic income tax down will be a sure fire winner with their constituents. I am sure their are those among us that are obsessed with this issue, just are their are those that will grumble endlessly when the publican in my local puts up the price of a pint by a penny. But that fact is that most of us are aware of the need for taxation, understand that occasionally it needs to be increased and think their are more pressing issues.
Having stood firmly on my soapbox and said all that I have to add that I think that Mr Brown’s decision to promise to keep the lowest rate of tax steady at 20 pence in the pound is a good one. Figures prove that the lower income earners of your society pay out far more of their income proportionally than anyone else. I tend to think that taxing them anymore would be counter productive.
As to whether the policy will help in way to get the labour party elected, I have my doubts. It is a sad fact that the lowest income earners this is directed at are the least likely of any one to come out to vote.
If you are concerned in anyway about income tax or VAT or corporate tax then please do get in contact. We deal with taxation issues every day and would love to help you out.
VAT And the Property Rental Business
Posted: 29/03/2010 Filed under: Small Business, UK Taxation, VAT, VAT Registration | Tags: business concerns, corporate tax, corporation tax, Small Business, Tax, Taxation, uk companies, uk investments, UK tax, VAT Leave a comment »For a start I have to admit that the title to this blog is a bit of a misnomer if you listen to the government. Because the fact that they refuse to treat landlords as if they are a legitimate UK business is the problem. Most of us were fairly pleased to see that there was no huge tax hike mentioned in the budget but spare a thought for the property investors who use their portfolio as their sole income. Unlike every other business in the land they are still required to pay full VAT on their business costs.
Things such as home improvement and maintenance are not VAT free. Anyway the reason I bring this up now is because of a story I saw in the pages of the Financial Times. Apparently there is such a thing as the Cut VAT For Landlords Coalition. I was not aware of this and the article was also pointing out that a big player in the property game The British Property Federation (BPF) have recently signed up.
It appears that the coalition is not even hell bent on the abolishment of VAT for property businesses but rather a compromise to suit everyone, cutting the VAT to 5%. As a spokesperson for the BPF says this would be
“huge benefit to the private rented sector, leveling the playing field between those who use VAT and non-VAT registered traders and stimulating improvement in the sector’s stock, 40 per cent of which was built before 1919″
Wow a way to improve housing and stimulate the economy, sounds like a winner to me.
If you have any questions about VAT and the way it affects your business or you would like any advice on your UK company at all then please get in contact with us here at St Matthew’s eAccounting so we can help you to get things clear.
Budget Highlights-VAT Not Even Mentioned
Posted: 26/03/2010 Filed under: Small Business, UK Company Set Up, UK Taxation, VAT, VAT Registration | Tags: corporate tax, corporation tax, Tax, tax refunds, Taxation, uk companies, uk investments, UK tax, VAT Leave a comment »The first thing i have to say about this years budget is wow, you are really out of luck if you are a cider drinker! ten percent rise plus inflation, i have a funny feeling that there may be a repeat of the famous banning of darling from pubs, this time it is especially likely in places such as Somerset who are bound to be far from tickled by this development. Apparently the rise is due to a lack of tax on cider in recent times but I have a feeling that cider drinkers will not be feeling blessed. Aside from the news on cider in some ways the budget was more notable for what it did not say, there was, for example no mention of VAT.
Given the large amount of speculation recently about the possibility of a rise in VAT its absence was a surprise for some. In regards to what i wrote in the previous blog this week, I am delighted to see that so far Mr Darling has stuck by his word. For me that is more important than the fact that VAT has stayed the same.
Rises in fuel will bug the commuter but as far as the economy is concerned the bigger worry will be for those businesses that have transport at their heart. Is there ever going to be a year where these guys are not whacked in some way?
Aside from these points the usual suspects were there, two percent on beer wine and spirits, one percent on cigarettes. Perhaps the biggest news was the adjustments on stamp duty. I shall blog further on this topic tomorrow.
In the meantime the the 31st of March is approaching so if you are having trouble getting your head around UK tax give us a ring here at St Matthew’s eAccounting and we will make it all simple for you.
No VAT Rise and No Second Budget Says Darling
Posted: 22/03/2010 Filed under: UK Taxation, VAT, VAT Registration | Tags: corporate tax, corporation tax, uk companies, uk investments, UK tax, VAT Leave a comment »With the specter of the budget rising before us this Wednesday it is reassuring to have some idea of where it is all heading. No that the politicians ever give too much away. What Mr Darling has said in the early days of this week, however is that there will be no VAT rise and that this budget is it for Labour, there will not be a pre election budget and then a real one after (if) they retain power.
On the second point I have to give a loud “I should think not!”. Had I been Mr Darling I think I would have considered it a better option to ignore the Conservative parties jibes about this budget being window dressing than to answer them and give slight suggestion that the thought would ever enter my head. This electorate has put up with a lot in its time but I think even they would draw the line at this sort of blatant trickery.
As for the rise in VAT I think it is important that both parties are clear on their intentions regarding this. It is fairly straightforward as a question really. I am not claiming to be a economics expert so I have no definitive opinion on the matter of the raise itself (for now anyway). What I do feel very strongly about, however, is that the parties need to tell us the whole, undisguised truth and restore some of our battered confidence in our leaders. Now is not a time for fibs and half truths.
So let’s hope that when Mr Darling says that a rise in VAT is “not on the table” he means it is not going to happen not, it is going to happen but I cannot afford to tell people that right now. That would be very disappointing.
If you are having issues sorting out your VAT or would just like to discuss UK company taxation in general then feel free to get in contact and we can help you to get over any problems you may be having.
