Latest news with #RachelReeves'
Yahoo
14 hours ago
- Business
- Yahoo
Inheritance tax nets record £6.7bn before Budget raid
The Exchequer raked in a record £6.7bn in inheritance tax between 2022 and 2023, as a longstanding freeze on the tax-free threshold and ballooning asset prices meant more estates were sucked in to paying the unpopular levy. The overall earnings from inheritance tax rose by over £700m in the tax year 2022/3, official data showed, a year on year jump of 12 per cent. HMRC attributed much of the added haul derived from more estates becoming liable to the duty thanks to thresholds remaining frozen at £325,000 since 2021. As many as 13 per cent more households were liable to the levy in the most recent official numbers from the UK's customs authority, taking the total number of estates that paid an IHT bill to 31,500. The figures, which come on the back of a similarly large jump in the 2021/22 year, are the latest evidence of the tax making up an increasingly large share of Treasury earnings. Receipts have more than doubled in the space of a decade, and are expected to rise even more sharply in the coming years, after the Chancellor removed several reliefs on the levy at her maiden Budget last October. Budget to drive higher inheritance tax bills The majority of additional revenues – due to kick in 2027 – will come from the government's telegraphed move to bring pension pots into the scope of inheritance. Until Rachel Reeves' maiden fiscal event last year, savers' nest eggs had escaped being subject to the levy. Claire Trott, head of advice at St James's Place, said that change alone was likely to mean an additional 10,500 estates will pay inheritance tax; a 55 per cent increase over just five years. The government also chose to end the decades-old Agricultural Property Relief and Business Property Relief carve-outs, that had previously allowed owners of farmland and family businesses to pass down their assets without paying the levy. They are expected to raise a further £500m annually for the Treasury. But the changes proved immensely unpopular and sparked a string of protests across the country. Farmers and Labour's political opponents branded the overhaul the 'family farm tax', and a cross-bench group of MPs recently called for the changes to be delayed by a year, while families adjusted their tax affairs. Pete Fairchild, head of private clients at professional services firm Crowe, said the swath of changes had resulted in abrupt behavioural responses from clients looking to adjust formerly tax-efficient plans. 'More individuals are reverting to seeing their pension pot as a vehicle to provide income in retirement, as opposed to an IHT planning opportunity,' he said. 'We are seeing more lifetime giving as people look to pass on their wealth and survive seven years to reduce their chargeable estate. 'Many clients have taken their 25 per cent tax-free lump sum from their pension and gifted that immediately to their children.' A spokesman for the Treasury said nine in 10 estates will continue to pay no inheritance tax by 2030. He added: 'The tough but necessary decisions we've taken on tax mean we could protect working people's payslips from higher taxes, invest record amounts into the NHS, defence and other public services while keeping bus fares at £3 and expanding free school meals.'
Scottish Sun
2 days ago
- Business
- Scottish Sun
Bank of England chiefs tipped to cut interest rates twice more before the end of the year to aid growth
Read on to see Rachel Reeves' reaction to the news and how it could affect growth CUTS 'ON CARDS' Bank of England chiefs tipped to cut interest rates twice more before the end of the year to aid growth Click to share on X/Twitter (Opens in new window) Click to share on Facebook (Opens in new window) INTEREST rates will be slashed twice more by the end of the year to aid growth, says global finance agency the IMF. The Washington-based body believes the rate will come down from 4.25 per cent. Sign up for Scottish Sun newsletter Sign up 2 Chancellor Rachel Reeves says the IMF forecasts show the UK remains the G7's fastest-growing European economy despite global challenges Credit: PA However, the pace of reductions around the world will be slower than previously forecast. The Bank of England is set to make its decision on rates next week. The IMF also upgraded its global growth rate marginally to 3 per cent for this year. It predicted the UK would be the third fastest growing G7 economy this year and in 2026. There has been a marginal upgrade to UK growth which is expected to rise by 1.2 per cent this year, which is 0.1 per cent higher than expected back in April. The global upgrade since April was largely driven by US tariffs being lowered since higher rates were first announced by Donald Trump. Warnings were also sounded over conflict in the Middle East, with possible risks to global shipping and trade, which could push up oil prices. Chancellor Rachel Reeves said: 'The IMF's forecasts show that the UK remains the fastest-growing European economy in the G7 despite the global economic challenges we are facing.' Workers' pay across the UK has slowed as businesses face increased staffing costs making an interest rate cut next month "more likely". Average weekly earnings, excluding and including bonuses, rose by 5% between March and May, according to the Office for National Statistics (ONS). Raising taxes will kill off growth, Reeves warned as she pledges to rip up business red tape
The Independent
3 days ago
- Business
- The Independent
Attention all shoppers! This everyday item may soon put up the cost of your weekly shop…
For the sixth month in a row, food prices have risen in the UK – with the latest figures from the British Retail Consortium (BRC) revealing the worst hit items are basics, such as eggs, meat, cheese and milk. Another casualty of food inflation, according to this month's data, is the humble cuppa – with teabags seeing a sharp increase of 4 per cent this month, up from 3.7 per cent in June. These increases are cumulative. Even if food price inflation falls – and there is precious little sign of that – prices will still rise. The BRC's number isn't quite as bad as that produced by WorldPanel, formerly Kantar, though, which recorded a 5.2 per cent rise during July. But that's just comparing 'bad' with 'worse'. Even so, the fact remains that it's everyday essentials and shopping staples that are going up in price – something we should all be worried about. Food price inflation hits those on low incomes hardest. True, tea isn't something you need in order to live. But come on: if even tea is being pushed into the luxury category there's clearly a larger issue at play. So, what's to blame? As ever, it's down to a combination of factors. Food inflation has risen across the board because of the extra costs loaded onto supermarkets by, you guessed it, the government – including Rachel Reeves' decision to increase employer national insurance contributions (NICs) while lowering the threshold at which the levy kicks in. This has hit grocers particularly hard because of the high number of relatively low-waged staff they employ. The chancellor promised not to tax 'working people', but these figures clearly demonstrate that she has done exactly that. Other regulations have further tightened the screw. Grocers have been chafing at the 'extended producer responsibility scheme' – better known as the packaging tax. April created a cliff edge, with these changes hitting at the same time as a higher minimum wage, which further hiked labour costs. The supermarkets all pay above the minimum and boosted pay rates to keep them above the floor. And don't forget Brexit, which increased the cost of importing food from the EU. (Some of this is on the previous government, of course.) Combined, these measures injected a super-concentrated shot of adrenaline into food prices, exacerbated by the fact that supermarket suppliers had to grapple with the same higher NICs and wage pressures. Some individual food items, however, face specific pressures on top of all that – including tea. Although it might come from abroad, it isn't entirely immune from higher UK labour costs. Yorkshire Tea, for example, is packaged in Harrogate. However, that pales by comparison to the impact of climate change, which hits producers' yields. Like many agricultural crops, tea has rather specific requirements when it comes to temperature, rainfall, humidity and so on. Climate change is leading to more erratic weather conditions – thus lowering production. Add in geopolitical instability – the war in Ukraine, Houthi attacks on shipping, etc – and you can see why the price of your daily cuppa is leaving an unusually bitter taste. The UK-India trade deal should help. But the benefits from lower tariffs are nowhere near enough to stop the kettle boiling. Meat prices have surged as a result of a combination of increased consumption, both globally and locally, and reduced production. Eric Lyons, a Solihull-based butchers, explains in blog post that UK beef consumption is forecast to increase by 1 per cent while production is set to decline by 5 per cent. 'This is further expedited through the closure of farms. Last year, around 30 farms in Scotland shut down, significantly reducing local production and adding to the supply shortage,' the company said. Avian flu, meanwhile, has cut the number of chickens available for slaughter. Butter has been affected by reduced dairy production at a time of high demand and all the other nasties. This helps to explain why hopes that a supermarket price war – which looked to be breaking out a few months back – would put a lid on food price inflation have all but evaporated. Faced with rising consumer discontent, and more and more anguished consumers filling up MPs' inboxes, we can expect politicians to seek scapegoats. This happened the last time food price inflation spiked a couple of years back (when it was even worse). There was a great deal of chuntering among MPs about the grocery sector and the Competition & Markets Authority was drafted in. Here's what it concluded: "Overall, we didn't find widespread evidence of weak competition: profit margins were historically low; consumers were switching to get the best deals; and the lowest-price retailers were gaining market share from others.' So that one isn't going to fly. If the government wants to reduce the burden on 'working people' – the people hardest hit – at a time when so many pressures are pushing prices up, here's what it should do: Reverse the increase in national insurance, scrap the reduced threshold at which it kicks in, repeal the packaging tax, and consider rejoining the European single market. Yes, yes. I know. Those are fantasies. So prices look set to remain elevated. The best we can hope for is for the government not to dream up anything that makes it worse (such as threatening to fine supermarkets for failing to sell enough healthy food to help tackle obesity.) Ministers should think very carefully about such apparently high-minded ideas that come with an expensive sting in the tail. But I'm not holding my breath. Are you?
Scottish Sun
3 days ago
- Business
- Scottish Sun
Fifty thousand businesses on brink of collapse over ‘immense strain' of rising wage costs
Those in 'significant' financial distress increased by ten per cent over the year 'CRITICAL' LEVELS Fifty thousand businesses on brink of collapse over 'immense strain' of rising wage costs FIFTY thousand businesses are on the brink of collapse as rising wage costs put them under 'immense strain', a report reveals. The number in critical financial distress has risen by more than a fifth compared with a year ago. Advertisement 2 The British Beer and Pub Association warned 378 pubs would close this year in England, Wales and Scotland Credit: Getty Chancellor Rachel Reeves' increases in National Insurance costs and the minimum wage are seen as key reasons, the Begbies Traynor survey shows. Bars and restaurants at 'critical' financial level were up by 41 per cent. And there was a 39 per cent rise among travel and tourism companies. The total number hit 49,309. Advertisement Those in 'significant' financial distress increased by ten per cent over the year to 666,876. Shadow Chancellor Mel Stride said: 'Labour's reckless Jobs Tax is pushing thousands of small businesses to the brink. "The lifeblood of local communities are paying the price.' Ric Traynor, of Begbies Traynor, said: 'Small and medium-sized businesses across the UK are being put under immense strain by the recent increases to employer's NI and the national minimum wage.' Advertisement The British Beer and Pub Association warned 378 pubs would close this year in England, Wales and Scotland. The BBPA's Emma McClarkin said: 'We're calling on government to fulfil promises of business rates reform, mitigate costs and cut beer duty.' 2 The number of businesses in critical financial distress has surged by over 20% — with Rachel Reeves' hikes in National Insurance and minimum wage blamed Credit: PA
Fashion Network
4 days ago
- Business
- Fashion Network
UK retail downturn stretches into 10th month, CBI says
A downturn in British retail sales extended into its 10th month in July as rising prices weighed on consumers, although the pace of the fall was less severe than in June, a Confederation of British Industry survey showed on Monday. The CBI's monthly gauge of how retail sales compared with a year earlier stood at -34 this month, an improvement on June's -46 but still a sign of weakness in demand. A measure of expected sales for August rose to -31 from -49, the CBI said. "Firms reported that elevated price pressures – driven by rising labour costs – and economic uncertainty continue to weigh on household demand, which has contributed to sales volumes falling since October 2024," Martin Sartorius, principal economist at the CBI said. Employers groups have said finance minister Rachel Reeves' decision to increase the social securitycontributions they pay for their staff, as well as an increase in the minimum wage, is contributing to higher prices. Weak demand was mirrored across the distribution sector, with wholesale and motor trades also seeing declining sales, Sartorius said. Official data published last week showed British consumers shopped more in June after May's big fall with hot weather helping to increase sales of drinks, clothes and car fuel. However, in the three months to June, sales volumes rose by 0.2%, the weakest increase since the three months to February. Many households are feeling the squeeze again from an inflation rate that rose to 3.6% in June. While the CBI's overall sales gauge remained in negative territory, online sales volume rose for a third month in a row, albeit marginally. The data was collected between June 27 and July 15 and was based on responses from 56 retailers and 91 wholesalers.
