Latest news with #AnnaLeach
Bloomberg
2 days ago
- Business
- Bloomberg
Confidence Among UK Directors Rebounds to Pre-Budget High
UK business confidence has recovered to levels last seen before Labour's budget in October as investment intentions pick up but lingering fears of a global downturn continue to weigh on sentiment, according to the Institute of Directors. The business group's survey of 483 directors showed optimism returning despite the £26 billion payroll tax that came into force last month and ongoing trade uncertainty. But IOD Chief Economist Anna Leach urged the government to stick to tough spending plans at next week's review to avoid more damaging tax hikes.
Telegraph
3 days ago
- Business
- Telegraph
Trump plots tax raid on foreign companies in threat to Britain
The two sides continue to negotiate despite the trade deal struck earlier in May. Anna Leach, chief economist at the Institute of Directors, said the Section 899 powers would put more pressure on the Prime Minister in the talks. 'It adds further pressure to the ongoing UK-US trade negotiations – the terms for the deal announced on May 8 already 'commits' (but does not legally bind) both the US and the UK to negotiating 'an ambitious set of digital trade provisions',' she said. Scrapping or watering down the digital services tax, which is forecast to raise more than £1bn per year, would be a blow to Rachel Reeves, who is already facing pressure to find billions of pounds more to fund an about-turn on winter fuel payments to pensioners. Downing Street has previously insisted the tax is not up for negotiation. At present, businesses operating in the US are subject to various state and federal-level taxes, but the powers contained within the new bill would allow an additional levy to be added on top. It would apply not just to corporate profits but also gains from investments into US assets, potentially including government debt. The powers would only penalise companies that take money out of the US. It comes as Mr Trump pushes businesses to invest and keep more money in the country. Peter Roskam, a former Republican member of the House of Representatives, and now head of law firm BakerHostetler's federal policy team, said the proposal 'brings a sledgehammer to the idea that the US will allow itself to be characterised as a tax haven by anyone'. However, experts said the threat would make foreign investors and businesses less willing to commit to the US. 'Weaponisation of US markets' Ms Leach said: 'This would stoke uncertainty further, undermine returns and reduce the attractiveness of the States as an investment destination. 'This is perhaps helpful to the Chancellor who is seeking to persuade investors to place their bets on the UK market.' Chris Sanger, tax partner at EY, said: 'It would impose an additional cost on foreign businesses operating in the US. That might mean the governments outside the US would change their rules, or it might mean that companies, much as they are seeing with tariffs, have an additional cost of operating in the US, which may make them less competitive in the US market.' George Saravelos at Deutsche Bank said the tax threat could pose a risk to the US's own public finances. The rule appears to allow Mr Trump to impose the border tax on foreign investors who buy US government bonds – effectively lending to the country – if they attempt to transfer the interest earned from those bonds back to their home countries. Mr Saravelos described it as a 'weaponisation of US capital markets' that would put investors off financing the US state. He said: 'The adverse impact on demand for US Treasuries and funding the US twin deficit at a time when this is most needed is clear.' Jordan Rochester, at investment bank Mizuho, said investors would demand a higher rate of interest from the US government to compensate for any higher charges, driving up the White House's borrowing costs. 'Just the threat of it being used could spook investors, trigger another sizeable market sell-off, and make the administration think twice about its actual use,' he said. Mr Trump's tax and spending bill contains a wide range of provisions and policies, but predominantly sets out trillions of dollars of tax breaks partly funded through cuts to healthcare. The bill was narrowly passed by the House of Representatives earlier in May and has now moved to the Senate for approval. Commenting on its passage, Mr Trump wrote on Truth Social: 'This is arguably the most significant piece of legislation that will ever be signed in the history of our country.'
Yahoo
10-02-2025
- Business
- Yahoo
‘Complex' tax system costs businesses £15bn as HMRC spending surges
Britain's 'increasingly complex' tax system is costing businesses £15.4bn a year just to comply with, the public spending watchdog has warned. Companies are paying at least £6.6bn per year on accountants, £4.3bn on internal administrative staff and £4.5bn on software and postage to satisfy increasingly difficult tax rules, according to a report by the National Audit Office (NAO). The NAO said the figures were produced by HM Revenue & Customs and likely to be a underestimate. The watchdog said these 'significant' costs were rarely considered when making decisions about tax. The report also raised concerns about the rapidly rising cost of running the tax office itself. HMRC spending has risen by more than half a billion pounds since the pandemic alone, with an extra £100m spent on staff. Extra spending has not led to better outcomes. Investment in digitising tax has been 'mixed' at best and HMRC has found it 'difficult to achieve efficiencies through its customer service provision'. As a result, taxpayers are losing trust in HMRC as they find it harder to deal with, the NAO said. Anna Leach, the chief economist at the Institute of Directors (IoD), said: 'These costs have real-world implications: 48pc of IoD survey respondents said that investment was lower due to tax complexity and 23pc said innovation was lower.' She called for HMRC to set measurable targets to reduce the administrative burden on its customers. 'It's clear that HMRC has at best a patchy understanding of the cost it is imposing on taxpayers. Addressing this measurement gap is key,' Ms Leach said. The report comes amid growing alarm about the bloated and growing public sector. The Bank of England last week blamed an increase in the size of the state for negative productivity growth last year. The NAO's findings will add to concerns about the growing burden on the private sector. Business leaders have expressed alarm about the Government's decision to increase the burden on companies through a £25bn increase in employers' National Insurance. At the same time, Angela Rayner, the Deputy Prime Minister, is empowering unions and staff through an overhaul of workers' rights. The Government's own estimates suggest the workers' rights changes could cost businesses as much as £5bn a year. Darwin Friend, head of research at the TaxPayers' Alliance (TPA), said: 'Britain's tax system is already a maze of complexity and red tape, piling pressure on businesses. 'Yet instead of relief, Reeves is hitting them with a damaging jobs tax hike and the Employment Rights Bill – measures that will do more harm than good. 'The Government should not only scrap the National Insurance hike but go further and simplify our broken tax system to boost jobs and growth.' The NAO's findings are likely to reignite calls for the Government to copy Donald Trump by appointing an efficiency tsar with a private sector background. In the US, Elon Musk has been charged with slashing spending at organisations ranging from USAID to the Pentagon in his new role as head of the Department of Government Efficiency (Doge). The world's richest man has started offering voluntary redundancy to millions of US public sector staff in a ruthless efficiency drive, although his mass redundancy scheme was temporarily blocked by a judge on Friday. Rachel Reeves, the Chancellor, has created an Office for Value of Money, which is intended to reduce wasteful spending. However, a report from a cross-party committee of MPs recently warned the office itself risked being a waste of taxpayer cash. Increasing tax complexity, an increase in the number of people paying tax and higher staff investment led to a 15pc jump in the cost of the tax system between 2019-20 and 2023-34. The cost of running HMRC rose by £563m to £4.3bn. Over the same period, the office collected £829bn in tax, a 16pc increase. Stealth tax raids that began when Rishi Sunak was Chancellor have combined with population and employment growth to swell the number of people who must pay income tax by 4.5m between 2020-21 and 2023-24, taking the total number to 36.2m. Frank Haskew, of the Institute of Chartered Accountants in England and Wales (ICAEW), said: 'The UK's increasingly complicated tax system is saddling businesses and HMRC with extra burdens and costs, which are growing in real terms.' The NAO called for HMRC to reduce the administrative burdens on taxpayers. Gareth Davies, head of the NAO, said: 'Businesses and individuals deserve a modern, resilient and effective tax system to help them get their tax right first time. 'To get the most out of the money it spends on collecting taxes, HMRC must better understand how changes to the system affect the costs it incurs in administering taxes, as well as the financial burden on individuals and businesses.' An HMRC spokesman said: 'It costs us just half a penny to collect every pound of tax revenue, with the NAO recognising our compliance work provides good value for money. 'We're already improving and modernising the tax system to deliver the services our customers expect and slash red tape for business, and ongoing investment in our digital services will be vital to closing the tax gap yet further.' The Government will announce a package of tax administration simplification this spring, which it has said will focus on reducing the burden for small businesses.
Telegraph
10-02-2025
- Business
- Telegraph
‘Complex' tax system costs businesses £15bn as HMRC spending surges
Britain's 'increasingly complex' tax system is costing businesses £15.4bn a year just to comply with, the public spending watchdog has warned. Companies are paying at least £6.6bn per year on accountants, £4.3bn on internal administrative staff and £4.5bn on software and postage to satisfy The NAO said the figures were produced by HM Revenue & Customs and likely to be a underestimate. The watchdog said these 'significant' costs were rarely considered when making decisions about tax. The report also raised concerns about the rapidly rising cost of running the tax office itself. HMRC spending has risen by more than half a billion pounds since the pandemic alone, with an extra £100m spent on staff. Extra As a result, taxpayers are losing trust in HMRC as they find it harder to deal with, the NAO said. Anna Leach, the chief economist at the Institute of Directors (IoD), said: 'These costs have real-world implications: 48pc of IoD survey respondents said that investment was lower due to tax complexity and 23pc said innovation was lower.' She called for HMRC to set measurable targets to reduce the administrative burden on its customers. 'It's clear that HMRC has at best a patchy understanding of the cost it is imposing on taxpayers. Addressing this measurement gap is key,' Ms Leach said. The report comes amid growing alarm about the The NAO's findings will add to concerns about the growing burden on the private sector. Business leaders have expressed alarm about the Government's decision to increase the burden on companies through a £25bn increase in employers' National Insurance. At the same time, Angela Rayner, the Deputy Prime Minister, is empowering unions and staff through an overhaul of workers' rights. The Government's own estimates suggest the Darwin Friend, head of research at the TaxPayers' Alliance (TPA), said: 'Britain's tax system is already a maze of complexity and red tape, piling pressure on businesses. 'Yet instead of relief, Reeves is hitting them with a damaging jobs tax hike and the Employment Rights Bill – measures that will do more harm than good. 'The Government should not only scrap the National Insurance hike but go further and simplify our broken tax system to boost jobs and growth.' The NAO's findings are likely to reignite calls for the Government to copy Donald Trump by appointing an efficiency tsar with a private sector background. In the US, Elon Musk has been charged with slashing spending at organisations ranging from USAID to the Pentagon in his new role as head of the Department of Government Efficiency (Doge). The world's richest man has started offering voluntary redundancy to millions of US public sector staff in a ruthless efficiency drive, although his mass redundancy scheme was temporarily blocked by a judge on Friday. Rachel Reeves, the Chancellor, has created an Increasing tax complexity, an increase in the number of people paying tax and higher staff investment led to a 15pc jump in the cost of the tax system between 2019-20 and 2023-34. The cost of running HMRC rose by £563m to £4.3bn. Over the same period, the office collected £829bn in tax, a 16pc increase. Stealth tax raids that began when Rishi Sunak was Chancellor have combined with population and employment growth to swell the number of people who must pay income tax by 4.5m between 2020-21 and 2023-24, taking the total number to 36.2m. Frank Haskew, of the Institute of Chartered Accountants in England and Wales (ICAEW), said: 'The UK's increasingly complicated tax system is saddling businesses and HMRC with extra burdens and costs, which are growing in real terms.' The NAO called for HMRC to reduce the administrative burdens on taxpayers. Gareth Davies, head of the NAO, said: 'Businesses and individuals deserve a modern, resilient and effective tax system to help them get their tax right first time. 'To get the most out of the money it spends on collecting taxes, HMRC must better understand how changes to the system affect the costs it incurs in administering taxes, as well as the financial burden on individuals and businesses.' An HMRC spokesman said: 'It costs us just half a penny to collect every pound of tax revenue, with the NAO recognising our compliance work provides good value for money. 'We're already improving and modernising the tax system to deliver the services our customers expect and slash red tape for business, and ongoing investment in our digital services will be vital to closing the tax gap yet further.' The Government will announce a package of tax administration simplification this spring, which it has said will focus on reducing the burden for small businesses.
The Independent
06-02-2025
- Business
- The Independent
Record low number of businesses created across UK
A record low number of businesses were created across the UK in the final quarter of last year, new figures show. Business group the Institute of Directors warned the falling trend was 'concerning' and called on the Government to 'ease the significant pressures on business'. It comes just days after economic forecasters at the EY Item Club predicted the UK economy will improve more slowly than anticipated this year, downgrading Chancellor Rachel Reeves' hopes to rapidly boost growth. Figures from the Office for National Statistics (ONS) show 65,450 new businesses were created across the UK in the three months to December – down 8.5% from the same quarter a year earlier and the lowest number of any quarter since records began in 2017. It is clear that the breadth and scale of cost increases announced at the Budget will continue to dampen entrepreneurial activity and economic growth Anna Leach, Institute of Directors Some 13 of the 16 main industrial groups saw a fall in the number of businesses created over the past year. The most significant falls were seen in the transport and storage industry, followed by the business administration and support services sector. But separate figures from NatWest indicate there were around 5.6 million active businesses in the UK as of the end of 2024, the highest figure on record. Anna Leach, chief economist at the Institute of Directors, said the drop in business births was 'concerning' and called on the Government to alleviate financial and recruiting pressures on businesses. Ms Leach said a swift decline in business confidence, the rise in national insurance contributions and minimum wage hike announced at the recent Budget, as well as reforms to employment law 'seem to have cooled business dynamism in the UK'. She warned business leaders feel 'the attractiveness of the UK as a business location has weakened further since the Budget'. Ms Leach said: 'Our most recent polling shows that addressing the tax burden on business is crucial for lifting business confidence, followed by a scaling back of employment regulations and improving the UK's EU trading relationship. 'While the recent shift in the Government's rhetoric to emphasise growth is welcome, it is clear that the breadth and scale of cost increases announced at the Budget will continue to dampen entrepreneurial activity and economic growth. 'Until the Government seeks opportunities to ease the significant pressures on business, there's a very real risk that the job of lifting the UK's potential growth is made harder.' Pranesh Narayanan, research fellow at the Institute for Public Policy Research, said both business births and deaths must increase to support economic growth. Mr Narayanan added: 'Struggling public services and historically low levels of investment are holding businesses back. 'The Government has started to take steps in the right direction, such as recent announcements on infrastructure development, which should help innovators. 'But, to go further, they should make sure that the upcoming industrial strategy prioritises support for new companies, and a level playing field for them to compete against existing large players.' The ONS figures also show 69,435 businesses closed in the three months to December, which was 7.3% lower than in the same quarter in 2023. A Government spokesperson said: 'We're backing British business through our Plan for Change, which includes tackling the scourge of late payments and introducing a fairer business rates system which incentivises investment. 'We will be publishing our plan to help small businesses start up and grow later this year.'
