UK Tax Laws A Spaghetti Bowl
Posted: 17/08/2010 Filed under: UK Taxation | Tags: corporate tax, corporation tax, Tax, tax refunds, Taxation Leave a comment »The “spaghetti bowl” of UK tax law is to be simplified with a goal to boost the British economy.
The new government says that the tax system has become a hindrance to businesses under Labour, and that by simplifying it and making it more competitive for small firms it would stimulate economic growth.
George Osborne states “Today we turn the promises of opposition into the policies of government.”
Treasury minister David Gauke said “The tax system created by the previous government was overly complex and has made the tax affairs of millions of families and businesses across the UK extremely complicated.
“We need to reduce the complexities in our tax system and the coalition is committed to delivering that goal.”
The OTS’s remit includes UK taxes and duties controlled by HM Revenue and Customs, but it will not deal with tax credits or taxes administered by other bodies nor will it have any say in the setting of tax rates.
The chairperson of the new body will be Michael Jack, former Conservative MP and Treasury minister and the director shall be tax director at the Chartered Institute of Taxation, John Whiting. Neither shall be paid for their services.
This is truly excellent news for small businesses in UK, with the tax system easier to understand, people wont be as worried to start up in the market, causing the British economy to grow again. I know my clinets will welcome it and I am relived the government has finally seen the light.
If you need help understanding the laws on tax as they stand or how the changes will affect you please get in touch with us here at St Matthew’s eAccounting. We are happy to help.
UK Tax Laws Opaque And Complex.
Posted: 13/08/2010 Filed under: UK Taxation | Tags: corporate tax, corporation tax, Tax, uk companies Leave a comment »UK tax law is to be simplified. This is to cut the burden on business and attract foreign investment, George Osborne says.
The new body shall initially host a two year review – first looking at all 400 tax relief, exemptions and allowances within the system to see how they could be streamlined. The second review will be to find ways to simplify the tax system for small businesses, this includes trying to find a simplified alternative to the contentious IR35 code.
A Office for Tax Simplification is being set up to streamline the 11,000-page tax code.
Mr. Osborne says Britain had “one of the most complex and opaque tax codes in the world” and it needed to be simplified.
Announcing the new body at a press conference, Mr. Osborne said his “dream” was “that people might actually understand the tax laws which they were being asked to comply with”.
It is set to advise ministers where the tax system is too complex but it will not look at tax credits, which Mr. Osborne says he considers to be part of the benefits system.
Labour claim to have backed the simplicity movement but then announced ministers were bringing in yet more overly complex new taxes at the same time.
I believe this is very exciting for the future of small businesses, making the market a lot easier to break into.
Plimco Say the UK is Going to be OK
Posted: 10/08/2010 Filed under: Small Business, UK Company Set Up, UK Immigration | Tags: business, business concerns, corporate tax, Moving to London, moving to UK, VAT 1 Comment »I am always pretty sure that the UK is going to continue to be an economic strength despite the somewhat hard times we have been experiencing. It is always good to have outside confirmation of this though.
The UK have been backed by the world’s second largest bond house, Pimco, after they changed their aggressive stance against Britain’s gilts.
This is a major turn around from the beginning of the year when the very same company warned that the UK gilts (gilt-edged security) were “resting on a bed of nitroglycerine” as a result of the nations high levels of debt.
Strong words indeed and they caused a lot of angst at the time.
But after Pimco talking down the UK for much of the year they now seemed pleased since yields, which fell as gilt prices improved, have recovered from 4.27pc in February to 3.39pc.
The bond house have been quoted as saying “We do not expect the UK to fail in meeting its commitments”. For expert investors, Pimco added: “We believe exposure to the UK in the credit default swap (CDS) market offers a valuable opportunity.”
This dramatic change of stance has been put down to the Governments plan to attack the deficit. Mike Amey, an executive vice-president stated in his bid to support the Coalition Government “The coalition has demonstrated their intent to tackle the deficit immediately, and we think that is generally good news.”
I for one am happy with this new opinion, as I believe it shows the world that Britain is making a come back from our recession and that the likelihood of a ‘double-dip’ recession has decreased.
Austerity measures may well be as much about world opinion as anything else and I suppose we must look at the big picture for the UK economy.
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.
Exciting Figures As UK Economy Strengthens
Posted: 07/08/2010 Filed under: UK Immigration, UK Taxation | Tags: business concerns, corporate tax, corporation tax, economy, moving to UK Leave a comment »The UK is showing how strong it can be, confounding experts by growing at almost double the rate predicted in the past three months. It did trigger some thoughts in me concerning the necessity of some of the austerity measures, in particular the redundancies and taxation changes really need to be as severe as planned. But more about that in a minute.
For now let’s revel in some numbers
Gross domestic product (GDP) in the quarter to June leapt at an amazing 1.1pc, the most since the first three months of 2006, lifting sterling 1.2pc against the dollar. Economists had forecast just 0.6pc growth as a realistic aim.
The surge was driven by an astounding recovery in construction and the fortitude of Britain’s powerhouse services sectors. This puts UK growth for the first half at 1.4pc – already ahead of the Treasury’s own forecasts of 1.2pc for the full 12 months.
Capital Economics, which was predicting a 1pc annual increase, revised its position, describing the numbers as “a pleasant surprise” and saying: “The figures suggest that growth in 2010 overall may now be closer to 1.5pc.”
Although universally welcomed, the speed of growth reignited debate about the Chancellor’s savage austerity measures to get the public finances under control. In the short term, the planned £40bn of tax rises and spending cuts are expected to soak up demand and kill off growth.
My opinion is that messing with the UK taxation now, after such an impressive surge in the right direction is playing with fire. The government should allow the economy to recover more before throwing their unwanted weight around.
A License To Print Money In The UK?
Posted: 29/07/2010 Filed under: Small Business, UK Investment, UK Taxation | Tags: business, business concerns, corporate tax, corporation tax, economy Leave a comment »In recent news it was revealed that economist believe the Bank of England could restart quantative easing in the near future. What does this mean in real terms, well, basically the government is considering printing more money. Whether this is a good or a bad thing, just like with VAT rises, depends on who you talk to.
Minutes have been released from this month’s BoE rate-settings meeting and showed that the topic of “money printing” had been discussed for the first time since February.
The discussion was prompted by fears over the economic recovery.
“In the light of the news over the month, it seemed likely that growth would be weaker than previously expected,” the minutes said.
In a broad debate about policy actions in the event of an unexpected weakening or strengthening of the economy, the minutes suggested: “A further modest monetary stimulus would act to offset the softening in demand prospects and make it more likely that the inflation target would be met in the medium term.”
Vicky Redwood of Capital Economics noted that the discussion was “perhaps the clearest steer so far that more QE could yet be on the agenda”, and added: “July’s minutes suggest that a near-term interest rate hike still looks unlikely. What’s more, there were some dovish comments from other members, who noted that the prospects for GDP had deteriorated a little.”
Philip Shaw at Investec agreed, saying: “The key change was that members recognised that the outlook for activity had weakened since June’s meeting, and as a result, actively discussed the option of easing policy again… We cannot rule out a further round of QE… The outlook for interest rates is shrouded in uncertainty.”
Uncertainty indeed, with the government saying one thing and the Bank of England saying another, how are the British public supposed to know where they stand? I think they need to converse with each other in order to give us an honest answer.
ICT Immigration To Add to UK Prosperity
Posted: 14/07/2010 Filed under: UK Immigration, UK Investment | Tags: corporate tax, corporation tax, Immigration Leave a comment »I have recently read that new figures have been released relativing to the large scale of immigrant workers coming into Britain via the ICT system.
The ‘intra-company transfers’ that are being referred to as a ‘loop hole’, is what companies are using to get around the recently announced Conservative manifesto pledge.
The pledge, put in place by the Home Secretary, Theresa May, several weeks back, states that there shall be a limited number of migrant workers allowed into Britain from outside the EU, no more than 24,400 shall be granted access.
There are worries over the exploitation of the ICT system, as they believe it threatens the Governments plan to scale back migration levels in order to reflect the numbers in Britain from the 1990′s.
The Home Office has released a list of over 20,000 employers who have signed up to the programme to bring skilled migrant workers to the UK. The list was published on the UK Border Agency website weeks back, names range from Chelsea Football Club to hundreds of restaurants and takeaways.
From where I stand this is not a problem, I agree with Damien Green, the Immigration Minister “It is important that we attract the brightest and the best people who can make a real difference to our economic growth”.
The ICT system is a wonderful way for Britain to become one of the most diverse countries in the world, with the most skilled workers doing their best for the UK’s economy.
Income taxation Abolished For Low Earners
Posted: 22/06/2010 Filed under: Moving to London, Non Dom, Small Business, UK Taxation | Tags: corporate tax, corporation tax, Tax, Taxation, UK tax, VAT Leave a comment »I thought I would outline some of the things we are expecting from Mr Osbourne’s budget tomorrow so we can evaluate how close our expectations are. Mainly it is about taxation and spending cuts but which taxation and where is the axe likely to fall?
The first thing that jumps out at me from the predictions is the idea that George will be abolishing income taxation for the UK’s lowest earners. I must admit that this has always made sense to me. It seems a convoluted way to do thing giving people money with one hand i.e. child support and other benefits and then taking it away with the other. By all means if people are struggling to get their heads above the poverty line then let them keep the money they work for.
To go along with his tax exemption for low earners the chancellor is also likely to announce a number of money-raising measures, including an increase in capital gains tax, a levy on bank profits, and rises in alcohol and cigarette duties. There is also likely to be a change in aviation tax.
It is interesting about the aviation tax but a rise in taxation on cigarettes and alcohol is to be expected, have we ever had a budget that did not include this move?
Anyway we have not got much longer to wait. Tomorrow will give us all the answers.
CBI: UK Will Still Avoid Double Dip Recession
Posted: 14/06/2010 Filed under: Moving to London, UK Company Set Up, UK Taxation, Uncategorized, VAT | Tags: business, business concerns, corporate tax, corporation tax, recession, recovery, UK tax, VAT Leave a comment »Despite the dire talk coning from a lot of economic pundits and the way the government are talking up the ‘mess’ they have inherited, the CBI says Britain will still avoid a double dip recession. I think people understimate how important this is. Even with tax hikes in VAT and CGT predicted, the avoidance of the double dip specter is a huge plus.
I have a lot of customers who are involved in small business and other industries that rely directly on a healthy economy for their livelihood. I know we all do in some sense but for most of us it is a little more second hand. The news that a double dip is highly unlikely has small business celebrating.
The CBI, one of England’s most respected business organisations, also said that they expected the British economy to continue to grow this year, fuelled by the private sector.
They did have a warning for the new government though. They pointed out quite strongly that any over zealousness in the attempts to cut public spending would slow down the economic recovery. They acknowledge that borrowing needs to be brought under control but huge swathes of cuts was likely to be counterproductive.
I am not sure that the government is in any frame of mind to listen to these warnings.
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.
