Why the government's new industrial strategy is good news for car makers
Three months ago, Society of Motor Manufacturers and Traders boss Mike Hawes said it 'felt like you were being punched on all sides'.
But the government's new UK Modern Industrial Strategy is one of a number of developments that makes Hawes 'a bit more optimistic' about the future.
An automotive-specific trade deal with the Trump administration – the only one signed and in force of its kind in the world – is another reason for hope. People have even stopped asking him about Brexit…
Hawes credits this government, and in particular business secretary Jonathan Reynolds, for giving meaningful support to the industry.
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Times
26 minutes ago
- Times
The new middle-class tax revolt
Hundreds of thousands of savers are making big changes to the way that they make and spend money for one simple reason: tax. Some are cutting the hours they work, while others are turning down promotions, giving their pensions away to family members or even considering leaving the country — all because of frozen tax thresholds and upcoming tax changes. The phenomenon known as fiscal drag — where more people pay more tax as wages increase because tax thresholds remain frozen — means that 6 million more people will pay income tax this tax year than in 2021-22. Almost 7.1 million workers are now in the higher income tax band, up 2.6 million since 2021-22, and the number of additional-rate payers has almost doubled to 1.2 million. Collectively, we're set to pay £298.6 billion in income tax in 2025-26 — an extra £89 billion compared with four years ago, the latest government figures show, and this is set to rise further because income tax thresholds will remain frozen until at least 2028. We're also on track to pay £6 billion in tax on our savings and £18.6 billion on dividends. 'Fiscal drag has had a devastating impact on the tax we pay. These figures show just how much damage is being done to our finances by this horrible stealth tax — and there is plenty more to come,' said Sarah Coles from the investment platform Hargreaves Lansdown. So it's no wonder that some families are shaking up their financial behaviour to avoid bigger tax bills. We spoke to four to find out how. Income tax thresholds have been frozen since 2021, and even those on relatively modest wages are now being dragged into the higher-rate 40 per cent band that is applied to earnings above £50,270 a year. For families this comes with an added sting in the tail because they start to lose their child benefit entitlement not far above this threshold. Child benefit is worth £26.05 a week for the first child and £17.25 a week for other children, but once one parent earns above £60,000 a year of adjusted income, you have to repay 1 per cent for every £200 earned over that threshold. Once one parent earns £80,000 you get nothing. Justin King, 55, a financial planner from Christchurch in Dorset, reduced his working hours to ensure that he was still eligible for child benefit, worth about £2,250 a year for Olivia, 16, and Amy, 14. 'I had the option to work more, but the extra income would have been largely eroded by higher tax and the loss of child benefit. When I weighed it up, it just didn't seem worth missing out on time with my family,' he said. Because eligibility for child benefit is based on adjusted net income — your earnings after pension contributions and certain tax reliefs have been deducted — there are ways you can avoid this trap. Dean Butler from the life insurer Standard Life said: 'Higher earners could consider increasing their pension contributions to reduce their adjusted net income below £80,000. This way you could get some or all of your child benefit back, while also saving for your future.' • Why high earners are cutting their pay (clue: it's about 600% tax) There is evidence that more people are doing exactly this. There has been a steep increase in the number of taxpayers with adjusted earnings that are between £1 and £3,000 below the threshold — almost 1 million, up from 893,000 a year earlier, according to HM Revenue & Customs data. King has started to increase his working hours again now his children are older and the child benefit threshold has been raised — it was £50,000 until April 2024 and went up to £60,000. He said: 'As a financial planner, I often encourage clients to make life choices based on their values, and at that point, family time mattered more to me than extra income. You need to do your sums and work out whether that extra day's work may be more valuable to you and your family than contributing to the Treasury.' Salary sacrifice is another way to reduce your earnings. Offered by some workplaces, it means agreeing to reduce your salary by a certain amount in exchange for extra benefits such as pension contributions. It means you also save on national insurance payments because you 'give up' part of your salary to go into your pension. 'It's important to note, however, that salary sacrifice can harm mortgage applications and reduce payments based on salary, such as maternity pay, so it might not be right for everyone,' Butler said. • How free nursery hours for more children backfired The £100,000 cliff-edge is the most punitive threshold in the UK tax system, with workers in this band facing a marginal tax rate (the amount you pay on the next £1 earned) of 62 per cent. For every £2 you earn above £100,000 you lose £1 of your £12,570 personal allowance (the amount you can earn each year before paying tax), with the allowance cut to nothing by the time you earn £125,140. It gets worse for families: once one parent earns above £100,000 a year in adjusted net income, they are no longer eligible for tax-free childcare (a government-backed savings account for nursery fees worth up to £2,000 a year per child) and they lose entitlement to free childcare hours. Parents with children aged between nine months and two years can get between 15 and 30 hours of childcare funded by the government during term time (rising to 30 for all children aged nine months and up from September). Parents of three and four-year-olds can get 30 free hours. With an average full-time nursery place for a child under two costing £341 a week in England, this can be a vital lifeline. Once you earn more than £100,000 in adjusted net income you lose the free hours for younger children entirely, and only get 15 hours for three and four-year-olds. Emily Farmer, 32, from Hampshire, had always aimed to earn £100,000 in her career in marketing, but since her daughter Olivia was born 11 months ago, she has reduced her working hours because it's simply not worth earning more. 'Reaching £100,000 always felt like a career milestone for me, but after having my daughter and nearing this threshold, I made the strategic decision to move to a four-day week,' Farmer said. 'It's a shame to have to sacrifice career progression to make my family finances work.' Making extra pension contributions can also help workers at this cliff-edge reduce their take-home pay and avoid punitive marginal tax rates, Butler said. 'This could also help you recover some or all of your personal allowance, depending on how much you put in.' Savers can put up to £60,000 a year into a pension, including tax relief, or 100 per cent of their earnings, whichever is lower. This can be particularly valuable when employer contributions are factored in. However, it is important to consider whether you may need the money early because it is not usually possible to get at your pension savings before 55 (rising to 57 from April 2028) without incurring a large tax bill. • I spend £200 a week on summer holiday childcare From April 2027 pensions are set to be included as part of an estate for inheritance tax (IHT) purposes, and this has upended many peoples' financial plans. Defined contribution pensions (when your pot is based on what you pay in plus investment growth) are exempt from inheritance tax, but with this set to change, many savers are rushing to give away their wealth to avoid a 40 per cent IHT bill when they die. The tax is paid on estates worth more than £325,000 (£500,000 if they include a main home left to a direct descendant on estates worth up to £2 million). Couples who are married or in a civil partnership can inherit each other's allowances, meaning up to £1 million can be passed on IHT-free. Just under 5 per cent of estates pay IHT in the UK, but this is expected to rise to 8 per cent after 2027, according to HMRC. Alistair Dickson is concerned that the changes could leave his children with an unwelcome tax bill and is making plans to pass his wealth on as tax-efficiently as possible, including considering putting his house into trust. Dickson, 57, who lives in Glasgow, is also spending more, using his annual gifting allowance, and is even exploring the idea of moving to Portugal, which has a favourable tax set-up. Everyone in the UK can give away up to £3,000 a year and it won't count as part of your estate for IHT purposes. You can also make small gives of up to £250 per person, as long as they also haven't benefited from the £3,000 allowance. It is possible to give away much larger sums IHT-free as long as you live for seven years afterwards, after which the gift will no longer be counted as part of your estate. • Surge in wealthy using insurance to beat inheritance tax hit You can also give away unlimited regular amounts out of surplus income, as long as it does not affect your standard of living and you keep records to show a pattern of giving. The money must come from income such as earnings, rent, pensions or an annuity, and not from savings. Adrian Murphy from the financial advice firm Murphy Wealth said: 'For years it was assumed that pensions would be the last port of call for income in retirement — or might never be touched at all — and most of it would find its way to your children,. But that has now changed. This will only drive more people to give assets away or look at alternative strategies.' Proposed changes to the Isa system are causing more savers to alter their plans. Adults can save up to £20,000 a year into an Isa, in cash or investments, or a mix of both, but it is thought that the chancellor, Rachel Reeves, may slash the cash Isa limit in her October budget, in a bid to encourage more people to invest. The uncertainty could be having the opposite effect. Savers poured a record £14 billion into cash Isas in April, according to the Bank of England. Rob Mack usually invests about £500 a month but has been funnelling any spare money into his cash Isa in case the allowance is cut. Mack, 50, from north London, has saved £5,000 so far this tax year and hopes to use as much of the £20,000 allowance as possible before the budget. 'We've made some adjustments to our family finances, moving savings into cash Isas to keep them accessible and tax-efficient. It's essential to have quick access to funds when unexpected expenses arise, like a car repair or a boiler breakdown,' he said. Murphy is advising clients to use the changes as a starting point to review their investments: 'Cash saving in most cases should be for emergencies and short-term liabilities or expenditure.'
Daily Mail
26 minutes ago
- Daily Mail
EXCLUSIVE Revenge of the Taliban: Ex-UK interpreter warns data leak will mean 'more executions' as warlords murder three Afghans linked to foreign forces in a week
Taliban warlords are on a vengeful killing spree against hundreds of Afghans after the British Government lost a top secret database. One man was shot by a gunman who stepped from an alley on Monday and fired four bullets at close range into his chest – one of three assassinations in the past seven days. Panic has been spreading since Tuesday when Afghans were officially informed their personal details had been lost in the UK's worst ever data blunder, putting 100,000 'at risk of death'. Thousands received 'notifications' from His Majesty's Government saying sorry, and adding: 'We understand this news may be concerning.' It is not known if the Taliban actually has the database, which includes names of Afghans who helped the UK, as well as members of the British intelligence community, it is understood. But one Afghan soldier, who fled to Britain for fear of retribution, believes his brother was gunned down in the street this week because the militant group was aware of his affiliation to the UK. He said: 'If or when the Taliban have this list, then killings will increase – and it will be Britain's fault. There will be many more executions like the one on Monday.' The Mail has seen a dossier of more than 300 murders that include those who worked with the UK and some who had applied for the UK scheme, the Afghan Relocations and Assistance Policy (ARAP). The murdered include Colonel Shafiq Ahmad Khan, a senior Afghan intelligence officer who had worked alongside British forces. The 61-year-old grandfather was lured into a trap and shot twice in the heart on his doorstep in May 2022. Others include commando Ahjmadzai, who applied for sanctuary in the UK, and soldier Qassim, both killed in April 2023. News of the killings comes after the media, public and MPs were kept in the dark while ministers launched evacuation mission Operation Rubific. The Mail discovered the data breach in August 2023. Since then, 18,500 Afghans have been airlifted to Britain in secret, with 23,900 expected overall. Yet some 75,000 Afghans will be left to fend for themselves – and were instead offered 'advice' on how to stay safe when the UK informed them it had lost their details. Afghans now know that the missing dossier contains their names, phone numbers, their family's details and other facts which could help Taliban revenge squads hunt them down. The Mail's revelations about the data leak and the unprecedented super-injunction to cover it up – which we spent two years fighting in secret courts – has triggered political and security storms. So far, three parliamentary probes have been launched, with MPs expressing outrage that the Government kept them in the dark for so long. Last October ministers agreed to spend £7billion without any parliamentary debate. Ahjmadzai (above, left) and Qassim (above, right) were both murdered in April 2023 The missing database contains the names of 18,800 people who had applied to the ARAP scheme for loyal Afghans who had worked alongside British forces. Military interpreters saved countless British lives by being their 'eyes and ears' on the frontline. In May 2024, when the High Court initially tried to lift the super-injunction, Mr Justice Chamberlain said: 'The one thing that can be said with confidence is that affected persons would be better off learning of the data breach by notification from the UK Government than from a knock on the door by the Taliban.' There has been fury this week as the deadly implications of the 'double betrayal' by Britain sunk in, with one angry former interpreter telling the Mail: 'We risked our lives for the UK standing beside them day after day. Now they are risking our lives again.' While the methods may change, Monday's assassination on a quiet dust-caked street in the capital Kabul has now become a weekly occurrence. The victim's brother was a soldier with the Afghan special forces known as the Triples who was given sanctuary in Britain. Within an hour, news of the murder had reached the brother in Britain, who is convinced his sibling was executed because the Taliban, having been unable to kill the Triple himself, sought revenge on his family instead. Elsewhere in the city, a day later, Taliban fighters dragged a woman from her home, beating her on the street and dumping her for neighbours to take to hospital. A former British military interpreter who witnessed it told the Mail: 'The woman's husband worked for the West and it was punishment for that work. He is hiding in Iran and they told her it was because he worked with "infidels".' The murder of the soldier's brother and the beating of the woman took place in the hours before the lifting of the super-injunction, and it is unknown if any of the victims featured on the lost list. The Taliban boasted this week that they had obtained the leaked data, although this could not be verified. Mohammed, a former interpreter who once translated for former Prime Minister Gordon Brown, is now in Britain. He said news of the lost database had spread like wildfire since Tuesday, striking the 'fear of god' into former interpreters like him. Mohammed, 38, who was pictured with Mr Brown in Afghanistan, said: 'This has changed everything. In the past the Taliban did not often have confirmation that an Afghan worked for the UK, or what his role was, but now we know it is on the dataset together with our family members. It is a gift that leads to death.' Last night the MoD referred the Mail to a statement made by Defence Secretary John Healy in the Commons on Tuesday. He said: 'My first concern has been to notify as many people as possible who are affected by the data incident and to provide them with further advice. 'The MoD has done that this morning. Anyone who may be concerned can head to our new dedicated website, where they will find more information about the data loss, further security advice, a self-checker tool, which will inform them whether their application has been affected, and contact steps for the detailed information services centre that the MoD has established.
Times
26 minutes ago
- Times
‘First-time buyers want cheaper homes — not bigger mortgages'
After years of nursing training, Emma Restall decided to carry on her studies to become a doctor, so that her dream of becoming a homeowner might actually become a reality. 'I will be buying by myself and I wouldn't have been able to get a big enough mortgage on a nurse's salary,' said Restall, 28, from Chippenham in Wiltshire. She finished her nursing degree last year and began studying medicine at Newcastle University, working 12 hours a week as a nurse to fund her studies. She is among the first-time buyers who have been locked out of the housing market by high prices and tough mortgage requirements — exactly the sort of people who the chancellor, Rachel Reeves, and regulators are hoping to help by relaxing lending rules. Last week the Bank of England gave banks and building societies dispensation to lend more to borrowers with lower salaries — which the chancellor says will mean 36,000 more mortgages a year for first-time buyers. Banks started offering bigger loans from this week, but critics fear that relaxing the limits could see a return to the high-risk lending that triggered the 2008 financial crisis, while some first-time buyers say they would prefer more affordable housing, rather than government tinkering with the lending rules. Some 42 per cent of first-time buyers asked by the financial services firm Moneybox what the government could do to help said it should build more affordable homes. About 18 per cent said they would like to see looser mortgage affordability rules. Restall said: 'What always seems to be avoided in all these discussions is the gap between the average salary and the average house price. Borrowing more than 4.5 times your salary is nice, but the average house is about eight times salary. And no bank is going to give you that much.' She hopes to have enough saved to finally buy when she finishes medical school in 2029. She will be priced out of buying in Chippenham, so expects to buy in Newcastle instead. Restall has saved about £15,000 into a Lifetime Isa (which pays a 25 per cent government bonus on savings for a first home worth up to £450,000) and hopes to transfer another £4,000 from savings at the start of the next tax year in April. 'It feels like the government and regulators are just patching gaps by tinkering with mortgage rules rather than fixing the real problem — that the housing market is just getting more expensive compared with people's salaries,' she said. Restrictions from 2016 meant that no more than 15 per cent of each bank or building society's new lending could be at more than 4.5 times a borrower's income. This has now been made an industry-wide limit, meaning that lenders have more wiggle room, and can apply to the Bank of England to go beyond the 15 per cent limit — it will keep an eye on the big picture. Nationwide Building Society will now allow a single applicant to borrow up to six times their income if they earn £30,000 (it was £35,000 last week), while joint applicants can borrow up to six times income if they earn a total of £50,000, down from £55,000. Yorkshire Building Society this week cut the minimum salary needed to borrow up to five times your income from £75,000 to £50,000. Last week someone earning £50,000 could have borrowed a maximum of £224,500 whereas now they could get a loan of £250,000. Pressure from Reeves and the Treasury this year have also led almost all high street banks to reduce the interest rate at which they 'stress test' whether borrowers could afford higher payments. Mortgages at 100 per cent loan-to-value, where no deposit is required, have also made a comeback, having largely disappeared under a crackdown on risky lending after the financial crisis. • Thousands of lower earners to be eligible for mortgages in shake-up The Financial Conduct Authority (FCA) — the City regulator — and lenders are also discussing ways to make it easier for first-time buyers to get interest-only loans and for tenants to be able to use their rent track record as proof that they can afford a mortgage. Nikhil Rathi, the FCA chief executive, has called for the government to set out how much risk it is happy for regulators and lenders to take. James Daley from the consumer group Fairer Finance said: 'We have spent the past 17 years tightening up the rules after people borrowed too much, or too many people borrowed interest-only mortgages with no way to repay them. What exactly are we going to achieve by unwinding them now?' The average property sale price in England was 7.7 times the average salary last year, up from 6.6 times in 2004, and it has risen from 5.4 to 5.9 times in Wales over the same period. In March the average first-time buyer borrowed 3.58 times their income, at 77.5 per cent of the average sale price, with an average loan term of 31 years, according to UK Finance, the industry body. Average repayments on first-time buyer mortgages were 22.6 per cent of the average first-time buyer's income in March, the highest share since November 2008, raising concerns that borrowers are already stretching themselves to be able to afford a home. Martin Stewart from the broker London Money said: 'Because of the cost of living and the higher levels of tax households are paying, we are more at risk of borrowers getting into difficulty rather than a 2008-style banking crisis. You're seeing lenders chasing market share, the rules being thrown out of the window and more debt than you can shake a stick at.' Making it easier to borrow does nothing to make house prices more affordable, something lenders have acknowledged by calling for the government to build more homes. The government's planning reforms are expected to help, and the Office for Budget Responsibility expects more housebuilding to reduce the average house price by about 0.8 per cent by 2029. But a big loosening in mortgage lending could undo that. Daley said: 'I'm just disappointed that the conversation on the housing market has come back to affordability and the availability of mortgages, while dancing around the massive elephant in the room, which is the issue of supply. 'Everybody knows that there aren't enough houses and wages haven't kept up with rising prices.' • House prices in expensive areas fall as buyers drive hard bargain Before the financial crisis it was easy to borrow without your income being verified or any checks that you could afford repayments if mortgage rates went up. The banking industry insists it is not on a slippery slope back to those bad old days — stress test rates have been lowered, but not ditched altogether. Bank of England data shows that about 8 per cent of mortgages in the year to March were lent at 4.5 times income or higher, far below the 15 per cent limit. Buyers will be able to borrow larger loans if they can afford them, but will still have to pass affordability checks. Ben Merritt from Yorkshire Building Society said: 'There are customers, including first-time buyers, who can afford to borrow more than 4.5 times their income, who have been shut out of the market. We can now offer them a lifeline to borrow what they need for their dream home in line with our commitment to responsible lending. 'This is crucial in an economic environment where house prices in many parts of the UK continue to rise at a faster rate than incomes.'
