Boost for family finances as Easter getaway begins
Families planning an Easter break got a boost on 1st March when the cost of their foreign holidays are slashed as children under 16 will join under 12s in being exempt from paying Air Passenger Duty (APD) in economy class.
This change, which was announced by Chancellor George Osborne in the Autumn Statement 2014 would mean a saving of £142 to a family with two children under 16 travelling to long-haul destinations such as Florida and £26 off a holiday in Europe.
The change will also act as a boost to international tourism – worth more than £26 billion a year to the UK economy. Foreign visitors will also see the benefit and with people from Australia and the USA being some of the UK’s most popular visitors, it is hoped the potential savings will prove an incentive for even more families from far-flung countries to visit the UK.
New head of HMRC is an accountant
HMRC has announced that former MoD permanent secretary Jon Thompson will be their new chief executive.
While Thompson’s predecessor Lin Homer was often criticised for her lack of experience in senior financial roles, as a qualified member of CIPFA, Thompson’s career features a number of high-ranking finance positions.
In contrast to Homer, who conceded to not being a ‘tax expert’ at the recent PAC Google Tax hearings, Thompson’s previous role as MoD’s director general finance covered statistics, economics and analytics, as well as financial management, systems, internal audit and financial services. In this position, Thompson served as the head of the government finance profession at the Treasury.
Prior to joining the civil service, Thompson worked for the Big 4 accountants Ernst & and also served as Ofsted’s first finance director.
50p Income Tax cut raises £8bn
Speaking in the House of Commons recently, Chancellor George Osborne made an announcement on the latest tax collection figures from HMRC, which cover the 2013-14 tax year. The data shows that in this year, the first full year reflecting the reduction in the top rate of Income Tax for taxpayers earning more than £150,000, from 50p to 45p in the pound, that there was an £8bn increase in tax revenue from this group of taxpayers.
Mr Osborne commented: “This completely defies the predictions of the Labour Party and shows that what when we have lower, competitive taxes they are paid by all.”
However, the shadow chancellor John McDonnell called this data distorted and said “’The truth is that the delay in implementing the 45p rate probably allowed significant time for many wealthy people to structure their tax arrangements so that they could simply pay it at the Chancellor’s new lower rate.”
In my opinion Mr McDonnell may well be right that wealthy people have restructured their tax arrangements, but he can’t deny the fact that the lower rate has most definitely raised more tax.
PAC calls on Google tax settlement “disproportionately small”
The Public Accounts Committee (PAC) has concluded following the evidence session last month that it can’t judge whether the £130m tax settlement between Google and HMRC is fair to the tax payer.
“Google has been keen to parade its enthusiasm for simplicity in the tax system but the fact remains the company has chosen to set up a complicated tax strategy specifically designed to minimise its tax bill.”
“Google’s settlement sum is disproportionately small when compared with the size of Google’s business in the UK and I recommend HMRC to lead the way in pressing for changes in international tax rules to prevent aggressive avoidance by multinational companies”.
Meg Hillier MP, Chair of the PAC
The PAC expects HMRC to monitor the outcome of the other tax authorities’ investigations into Google, in particular the French tax authorities, who are seeking £1.3bn from Google in unpaid taxes.
The new State Pension
The introduction of the new State Pension in April this year will radically simplify state pension provision, making it easier for ?people to understand what the State will provide in retirement.
As well as simplifying the system, the new State Pension will remove the inequalities in the current system whereby some groups, such as women and the self-employed, tended to build up low amounts of Additional State Pension.
As part of these changes, this complicated, earnings related element of the current system, is being abolished.
The government is expected to launch a consultation this year on how to address this issue in the longer term, recognising the increased value of the new State Pension, and seeking to balance simplicity, fairness and cost for members, public service pension schemes and the taxpayer.
Please click for more information please read my recent blog The New State Pension – Rules & Changes Explained
If you would like more detailed information on some aspect of UK Tax, send me an e-mail and I’ll be pleased to advise further.