logo
Guernsey vape retailers 'concerned' about impact of tax on liquid

Guernsey vape retailers 'concerned' about impact of tax on liquid

BBC Newsa day ago
One of Guernsey's biggest vape retailers has said the business is "very concerned" about plans to tax vape liquids in the 2026 budget.Tina Dorfner, who owns the Vape Bar in St Peter Port, said the proposals from the Policy and Resources Committee (P&R) could "have a huge impact" on trade.Retailers have said P&R has proposed a £2 tax on every 10ml of vape liquid, although the final plans are yet to be published. P&R has been approached for comment. In the UK, the government has decided to tax 10ml vaping liquid at £2.20 per 10ml from October 2026, while Jersey's government has signalled its intention to tax it in its budget for next year.
'You never know'
Peter Bierley, who owns The Tuck Shop and Vape Head in town, was more relaxed about plans to tax vape liquids. He said: "Ultimately, customers will just have to pay that tax."Whether it will stop some people vaping - perhaps - I do not think it will turn people back to cigarettes, because we have been told they are going to increase the tax on cigarettes at a similar price."So you know, hopefully, not too much impact; but you never know."Sophie Dorfner, who also helps to run The Vape Bar, disagreed: "It is going to end up with people going back to smoking, because they are going to be priced out."
Unregulated products
At The Vape Bar, there was consensus that this was still at an early stage and firm proposals had not been submitted by P&R. However, the island's retailers have been invited to meet States officials about the plans. Sophie Dorfner warned taxing the products could have impacts on the local market.She said: "I do think you are going to end up with a lot of people buying things online that are unregulated."They do not know what is in the products, they do not know what they are buying; a lot of those are unregulated products have illegal THC products in.
"People are going to end up buying things just because they are a lot cheaper, not knowing what is in them, and that is going to cause more health issues in the long-run."Tina Dorfner said she would wait for firm proposals to be published before making a full judgement, but admitted she was "worried" about the plans. She said: "A lot of people are concerned about whether this will mean they give up vaping and go back to cigarettes, because, once all of this comes in, and also if GST [goods and sales tax] is brought in, it will be a much more expensive product."Last year, Guernsey's States agreed to introduce a 5% goods and services tax, alongside a lower rate of income tax for earnings under £30,000 and reforms to social security contributions. However, those plans are under review while P&R member Deputy Charles Parkinson looks at the island's corporate tax regime. P&R is set to publish the budget for 2026 on 7 October, for debate on 4 November.
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Chancellor will have to raise taxes despite lower borrowing, say economists
Chancellor will have to raise taxes despite lower borrowing, say economists

The Independent

time6 minutes ago

  • The Independent

Chancellor will have to raise taxes despite lower borrowing, say economists

Chancellor Rachel Reeves will still need to raise taxes in the autumn budget despite lower-than-expected Government borrowing last month, economists have warned. Official figures released on Thursday showed that UK state borrowing slowed to £1.1 billion in July, providing some relief for the Chancellor. The Office for National Statistics said the figure, which was £2.3 billion less than the same month a year earlier, is the lowest July borrowing figure for three years. It came after a rise in self-assessed income tax and national insurance payments helped increase tax receipts for the month. July borrowing was lower than the £2 billion figure predicted by a consensus of economists. Borrowing for the first four months of the financial year stood at £60 billion, £6.7 billion more than during the same period last year. The figures come amid warnings the Chancellor may need to raise taxes again in the budget in order to plug a black hole of up to £51 billion in the public finances. It has been reported that the Government is looking at hitting owners of high-value houses with capital gains tax (CGT) when they sell their family home. The Guardian also reported that the Government is considering an overhaul of the current system on stamp duty on property purchases. Nevertheless, the Labour Government has ruled out increasing income tax, employees' national insurance contributions and VAT, restricting Ms Reeves' options when it comes to raising money. On Thursday, economists said that the latest data was positive for the Chancellor but does not halt the need for potential tax increases or spending cuts. Elliott Jordan-Doak, senior UK economist at Pantheon Macroeconomics, said: 'The Chancellor will still have to raise taxes in October despite borrowing matching official forecasts. 'The big picture remains that the public finances are in chronically weak condition. 'We think the Chancellor will need to resort to sin and stealth tax hikes, duty increases, and a pensions tax raid in order to meet her fiscal rules if she wants to meet her pledge of keeping headline tax rates unchanged.' Matt Swannell, chief economic advisor to the EY Item Club, said: 'Ultimately, it will be the OBR's (Office for Budget Responsibility) projection for borrowing over the coming years, not solely this year, that will determine whether the Government meets its fiscal target, and doing so will very likely require tax rises at the autumn budget. 'The little fiscal headroom left at the spring statement has likely been more than used up by rising bond yields, market expectations for the bank rate, and reversals in plans to cut spending in some areas, such as welfare reform.' The figures showed that central government receipts – the amount of money brought in, typically through taxes – was £100.1 billion for the month, up £8.8 billion against the same month last year. This came as compulsory social contributions, which include national insurance payments, increased by £2.6 billion to £16.3 billion after recent changes to national insurance contributions (Nics) paid by employers. Meanwhile, the Government also saw a £2.7 billion rise in self-assessed income tax receipts to £15.5 billion. The ONS also reported that state spending rose by £5.3 billion to £92.1 billion in July, partly linked to increases to pay and benefits, as well as cost inflation within departments. ONS deputy director for public sector finances Rob Doody said: 'Borrowing this July was £2.3 billion down on the same month last year and was the lowest July figure for three years. 'This reflects strong increases in tax and national insurance receipts. 'However, in the first four months of the financial year as a whole, borrowing was over £6 billion higher than in the same period in 2024.' Chief secretary to the Treasury Darren Jones said: 'We're investing in our public services and modernising the state, to improve outcomes and reduce costs in the medium term. 'Far too much taxpayer money is spent on interest payments for the longstanding national debt. 'That's why we're driving down government borrowing over the course of the parliament – so working people don't have to foot the bill and we can invest in better schools, hospitals and services for working families.'

Huge threat to over-55s as Rachel Reeves eyes up raid on tax-free pension lump sum withdrawals to fill £50bn blackhole
Huge threat to over-55s as Rachel Reeves eyes up raid on tax-free pension lump sum withdrawals to fill £50bn blackhole

The Sun

time36 minutes ago

  • The Sun

Huge threat to over-55s as Rachel Reeves eyes up raid on tax-free pension lump sum withdrawals to fill £50bn blackhole

RACHEL Reeves is reportedly considering cutting the tax-free pension lump sum as she tries to boost public finances. The chancellor is looking at it among a list of options ahead of her Budget this autumn, according to The Telegraph. Reeves faces difficult choices ahead as she needs to fill an estimated £50billion black hole in public finances. Industry insiders told the newspaper there was widespread speculation she could cut the maximum amount people can withdraw from their pension without paying tax. Currently you can withdraw up to 25% of your pot tax-free when you reach the age of 55. The amount is capped at £268,000, but the proposals could see this amount cut. Officials estimate cutting the cap could raise more than £2billion a year. It's worth noting that this is among a range of measures being considered and nothing is set in stone yet. One Whitehall official said the chancellor was not prioritising pension reforms and they thought it was "unlikely". But it's thought the measure is on the table and the chancellor could be forced to act given the scale of the country's economic problems. She has already ruled out breaking Labour's manifesto promise not to raise taxes for working people. This means income tax, VAT or employee National Insurance contributions should all be safe from tax rises. Therefore pension relief is one of the few options left for her to raise significant funds. Pensions minister Torsten Bell has previously advocated cutting the tax-free lump sum limit to just £40,000. When he was head of the Resolution Foundation think tank, he said the current tax-free allowance was "very generous, very regressive, and a strange incentive not to stagger your retirement income". "Capping the tax-free lump sum at £40,000 would raise £2billion a year while leaving three-quarters of future pensioners unaffected,' he said at the time. Last year, the Institute for Fiscal Studies (IFS) and Fabian Society think tanks proposed cutting the limit to a more generous £100,000. Treasury officials had asked a top pension provider to assess the impact of reducing the limit to £100,000 ahead of last year's budget. But Reeves opted against the move and instead chose to increase National Insurance contributions for employers. The Sun has contacted the Treasury for comment. Tom Selby, director of public policy at investment platform AJ Bell, said: "Cutting pensions tax-free cash is pretty unappealing, even for a chancellor as cash strapped as Rachel Reeves, because it will raise very little money in the short-term." He said the Government would need to protect people who have built up their tax-free pension savings up to the current limit, so any savings for the public purse would only be seen a long way into the future. He also warned that allowing the speculation to continue could risk undermining people's plans to save for retirement. What is tax-free pension cash and when can I take it? When you get income from pensions – both the state pension and private pensions – you normally have to pay income tax on anything over the personal allowance, which is currently £12,570 per year. But a special privilege of pensions is you can take some of the money free of income tax, which is a key reason for saving into pensions in the first place. If you have private pensions or workplace pensions – as most employed people now do – you can take up to 25% of the total value of all your pension pots as a tax-free lump sum. You are currently allowed to access this money from age 55 onwards, but this will rise to 57 in April 2028. Experts have urged people not to rush into any financial decisions based on the speculation. Ian Cook, chartered financial planner at Quilter Cheviot, said: "The concept of reducing the tax-free cash allowance is just one of several being tested in the past few weeks, and it's important to remember that none of these proposals are set in stone. "The best advice right now is to stay informed, speak to a qualified adviser if you're unsure, and avoid making any irreversible decisions based on speculation. "Financial planning should be based on certainty, not conjecture and that means waiting for clear, official guidance before taking action." What other options are on the table? The chancellor will be eyeing up a number of options ahead of the Budget and speculation is rife. She is thought to be considering inheritance tax changes among the options. This includes stopping parents from making unlimited tax-free gifts to kids by capping the value of gifts that someone can pass on to loved ones. Currently, you can give away unlimited amounts of money and assets to friends or family members without paying inheritance tax, as long as you do so seven years before you die. Reeves is also reportedly considering a raid on the sale of high-value homes. This would mean charging capital gains tax on the sale of family homes worth more than £1.5million. Another option is replacing the current stamp duty thresholds with a new property tax. The Guardian reported earlier this week the chancellor is considering a new levy of 0.54% per year on houses over £500,000. Meanwhile, any home worth more than £1million would pay 0.81% on the proportion of its value over the threshold. This would replace the current stamp duty thresholds, which are tiered depending on the value of your home. Officials are also said to be looking at whether to replace council tax with a local property tax. This would mean a total overhaul of the current council tax system, where an annual fee is paid to the local council to fund services such as road upkeep and state schools. Pros and cons of taking out your pension tax-free lump sum Some savers may want to take out their tax-free lump sum to pay off other significant debts or clear their mortgage. Others might want to buy a holiday home, gift the money to children or grandchildren, or make house renovations. It can be wise to clear mortgages and debts while you're in your mid-50s. But there's lots to consider before you take money out of your pension pot. For example, if you're spending the money on things that are nice to have then you could be left short when you retire. Plus you could lose out long-term compared with if you left the money in your pension pot. Taking the cash out and putting it into a bank account could mean it loses value over time because of inflation. If you keep it in your pension for longer, it can grow tax-free. You can also buy a bigger annuity - the amount of income you're guaranteed to receive each year in retirement - if you haven't already taken money out of your pension pot. If you have a defined benefit pension, where you get a guaranteed income for life, then often you have to give up some regular pension income in exchange for the lump sum. You should also consider the impact of inheritance tax (IHT). While money held in a pension can be passed on free of IHT – and potentially income tax-free if you die before age 75 – money held outside your pension could form part of your estate and be taxed at 40%. Mike Ambery, retirement savings director at Standard Life, said: "Pensions are long-term savings vehicles, and decisions about them should be made with a long-term perspective. "Acting on speculation can lead to unintended consequences - such as missing out on future investment growth or making choices that don't align with your retirement goals."

Rachel Reeves considers cut to tax-free pension lump sum
Rachel Reeves considers cut to tax-free pension lump sum

Times

time2 hours ago

  • Times

Rachel Reeves considers cut to tax-free pension lump sum

Plans to cut the pension lump sum that can be claimed tax-free are understood to be under consideration as part of revenue-raising measures in Rachel Reeves's budget. The chancellor decided against more than halving the threshold to £100,000 last year, but the policy is said to feature on a list of options being prepared by officials. At 55, most people can take a lump sum worth 25 per cent of their pension tax-free, up to the value of £268,275. The age threshold is set to rise to 57 from April 2028. Treasury civil servants are expected to suggest reducing the amount that can be withdrawn on retirement to raise a further £2 billion, according to The Telegraph. Allies of Reeves have remained tight-lipped about the budget, to avoid ruling revenue-raising measures in or out. Torsten Bell, the pensions minister and former director of the Resolution Foundation think tank, previously advocated cutting the tax-free cap to as little as £40,000. The Treasury is preparing to present Reeves with options to help raise tens of billions of pounds and avoid her breaking her own fiscal rules. The chancellor left herself with just £9.9 billion of headroom in her last budget. U-turns on moves designed to cut costs, including the winter fuel allowance and reforms to disability benefits, have eaten into that figure. Rising gilt yields and borrowing costs have added to the challenge. The government is also grappling with inflation, which has risen to 3.8 per cent — nearly double the Bank of England's target. Speculation about the budget could spark a repeat of last year, when there was a spike in savers taking their tax-free lump sum Reeves's fiscal statement in October. AJ Bell, an investment platform, said its customers took about £300 million extra from their pensions last year than was expected. • Savers fear for the pension tax-free lump sum Interactive Investor, another platform, said the value of tax-free lump sum withdrawals were more than 500 per cent higher in July last year, when Labour won the general election, than in July 2023. Similar moves would be likely to reduce the amount of revenue raised, at least in the short term, if savers sought to get ahead of any possible changes to the cap by drawing down the lump sum early. The Treasury refused to say this week whether the perk for pensions would be protected. A spokesperson said: 'The best way to strengthen public finances is by growing the economy — which is our focus. Changes to tax and spend policy are not the only ways of doing this, as seen with our planning reforms, which are expected to grow the economy by £6.8 billion and cut borrowing by £3.4 billion 'We are committed to keeping taxes for working people as low as possible, which is why, at last autumn's budget, we protected working people's payslips and kept our promise not to raise the basic, higher or additional rates of income tax, employee national insurance, or VAT.'

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store