Latest news with #taxation
Times
an hour ago
- Business
- Times
Jonathan Reynolds rules out ‘daft' wealth tax and says ‘get serious'
The business secretary has ruled out a 'daft' wealth tax as the International Monetary Fund (IMF) warned that other taxes will have to rise. Jonathan Reynolds told Labour backbenchers to 'get serious', dismissing the idea as a populist gesture that would not work. Lord Kinnock, Labour's former leader, has led calls for a 2 per cent annual levy on assets more than £10 million, which has been backed publicly by more than a dozen Labour MPs and privately many more. Rachel Reeves has been reluctant to rule out a wealth tax despite senior minsters privately concluding it would not work. • How could a UK wealth tax work? The impact examined Now Reynolds has made the government's most explicit public criticism by ridiculing the suggestion that a 'magic wealth tax' would dig the country out of a hole. He said an effective wealth tax 'doesn't exist anywhere in the world' and 'we're not going to do anything daft like that'. Reynolds told GB News: 'I say to people: 'Be serious about this.' The idea you can just levy everyone … What if your wealth was not in your bank account, what if it was in fine wine or art? How would we tax that? This is why this doesn't exist. 'There's a lot of populism out about this, and I'm frustrated. I see colleagues sometimes say this in parliament and I say: 'Come on, get serious.'' Reynolds said: 'This Labour government has increased taxes on wealth as opposed to income — the taxes on private jets, private schools, changes through inheritance tax, capital gains tax. But the idea there's a magic wealth tax, some sort of levy … that doesn't exist anywhere in the world. Switzerland has a levy, but they don't have capital gains or inheritance tax.' Experts, including the Institute for Fiscal Studies, have warned the government that no country has raised significant sums from a wealth tax, citing concerns over valuing assets and discouraging investment. Most countries that have introduced them have since abandoned them. However, Richard Burgon, the Labour MP for Leeds East, who delivered a petition on the tax to No 10 this week, said that 'the government has seriously damaged its own support by refusing to tax wealth — all while cutting support for disabled people, targeting the winter fuel allowance, and maintaining the cruel two-child benefit cap.' It came as the IMF said in its annual report on Britain that the chancellor would need to make 'tough fiscal choices' such as raising taxes on middle earners, scrapping the triple lock on pensions or introducing charges for the NHS. While it praised Reeves for 'growth-friendly' policies such as liberalisation of planning and said an 'economic recovery is underway', it warned that she would have to do more to raise cash or cut spending. The chancellor is already expected to raise taxes in the autumn after U-turns on winter fuel and welfare cuts combined with deteriorating forecasts left her facing a gap of £20 billion or more in public finances. With the government now facing months of speculation about how she will plug it, the IMF recommended raising even more cash in the budget to give herself more headroom against her fiscal rules and prevent a repeat next year. The IMF said the 'first best' option to reduce the need for constant tax and spending tweaks would be 'to maintain more headroom under the rules, so that small changes in the outlook do not compromise assessments of rule compliance'. It also suggested moving to one official assessment a year of whether Reeves is on target to hit her rules, instead of the two carried out by the Office for Budget Responsibility. However, in a warning to those hoping this would reduce the need for tax rises or spending cuts, the IMF warned that Britain's ageing population and high debt interest bill mean Reeves cannot avoid such painful choices in the long term. 'Unless the authorities revisit their commitment not to increase taxes on 'working people', further spending prioritisation will be required,' its report said. The IMF urged Reeves to press ahead with welfare reforms that have proved toxic with Labour MPs and replace the triple lock with a cheaper policy that would increase state pensions in line with the cost of living. 'Access to public services could also depend more on an individual's capacity to pay, with charges levied on higher-income users, such as co-payments for health services,' the IMF added. Mel Stride, the shadow chancellor, said the report showed that Reeves 'has already maxed out the credit card, her only options are to cut spending or raise taxes. The welfare debacle showed Labour are completely incapable of reining in spending. Businesses and families must brace for an even higher tax burden'. Reeves said the report 'confirms that the choices we've taken have ensured Britain's economic recovery is underway, and that our plans will tackle the deep-rooted economic challenges that we inherited'.
The Guardian
a day ago
- Business
- The Guardian
Lloyds boss warns Reeves against hiking taxes on banks as profits rise 17%
The boss of Britain's largest mortgage lender has warned Rachel Reeves that increasing taxes on banks in her autumn budget would damage Labour's plan for the City of London to power an economic recovery. Charlie Nunn, the chief executive of Lloyds Banking Group, said a rise in bank taxation 'wouldn't be consistent' with the chancellor's overtures as the government pushes to reboot growth. Against a backdrop of mounting speculation that Reeves could use her autumn budget to announce a fresh round of tax rises, his comments came as the high street bank reported a 17% jump in second-quarter profits. Nunn told journalists on Thursday the bank had not had any discussions with the government about a potential tax rise, and acknowledged that it was ultimately a 'political decision'. However, he said that targeting the financial services sector with higher taxes would mark a stark reversal by the chancellor, who last week announced a raft of changes to cut regulation and boost growth across the sector. He noted that Reeves had made the case for a 'strong financial services sector' to support the UK economy, and had highlighted that the industry had a 'huge role to play' to support households and businesses. 'We definitely believe that's an important thing to focus on, and obviously, therefore, [it] wouldn't be consistent with a tax rise,' Nunn said. He added that the UK already had 'the highest tax regime on the financial services sector of any major economy'. Banks face the 25% headline rate of corporate tax, as well as a 3% bank surcharge, and a further bank levy which is a charge on a portion of balance sheet assets. However, the Conservatives cut the levy from 8% in April 2023 in a measure opposition MPs decried as a costly giveaway. Earlier this month, analysts at Deutsche Bank speculated that Reeves could reverse the cut to raise about £1.5bn. Labour has placed financial services among its eight important sectors to receive government backing in its industrial strategy, while industry lobbyists have warned the chancellor that extra help is required to boost the City after Brexit. Estimates by lobby group UK Finance and PwC suggest that, when also accounting for employment taxes and VAT, banks in the UK are paying a total tax rate of about 45.8%. That compares with 38.6% in Frankfurt, and 27.9% in New York. 'We're proud of being one of the or the biggest taxpayer in the UK as Lloyds Banking Group,' Nunn said. 'So we are completely comfortable with that. But it is important when you look at the competitiveness of the City of London and the financial services sector that we remain a competitive tax regime.' Sign up to Business Today Get set for the working day – we'll point you to all the business news and analysis you need every morning after newsletter promotion Raising taxes on banks would also add to costs at a time when many lenders – including Lloyds – are bracing for a hefty compensation bill over the car finance commission scandal. A supreme court ruling is widely expected within the next week. Lloyds has put aside £1.2bn in provisions to cover potential costs. Updating the City on its second-quarter performance, the bank reported a 17% rise in pre-tax profits to nearly £2bn, up from £1.7bn last year, driven in part by higher fees from its pension, insurance and investments business. When asked whether he shared Reeves' view, expressed during her Mansion House speech last week, saying that regulation was acting like a 'boot on the neck' of business, Nunn replied: 'That's very much for the chancellor to use that language.' However, the bank boss said he believed there was a 'real opportunity to align regulation, increasingly, with competitiveness and growth.' Among the proposals welcomed by the Lloyds boss are plans in the coming months to review ring-fencing rules, which are the post-financial crisis regulations meant to protect consumer cash from a bank's riskier business activities. Bank bosses, including Nunn, had lobbied for ring-fencing to be abolished, arguing the rule is redundant as a result of other safeguards brought in after the 2008 banking crisis.
Malay Mail
2 days ago
- Business
- Malay Mail
Finance Ministry: SST expansion crucial, will make extra RM5b this year and double in 2026
KUALA LUMPUR, July 24 — The government expects to collect an additional RM5 billion in revenue during the second half of 2025 following the expansion of the Sales and Service Tax (SST) that came into effect this month. In a written parliamentary reply to Bagan MP Lim Guan Eng, the Ministry of Finance projected that SST revenue would double to RM10 billion in 2026, the first full year after the expanded tax framework is implemented. Lim had inquired if it would be feasible to delay the expansion of the SST, considering the global economic uncertainty caused by US President Donald Trump's tariffs, and requested a breakdown of collections by citizens and foreigners. The ministry acknowledged public concerns over rising costs but stated the government was obliged to ensure sufficient revenue to fund public programs and national development. 'The proposal to postpone the SST scope expansion will cause the revenue target not to be met, and subsequently, will affect the fiscal position and the government's ability to fulfill its responsibilities towards the people,' the ministry said. However, the ministry informed that it could not provide a breakdown of tax contributions between citizens and non-citizens due to limitations in the current revenue collection system. It explained that the tax database does not classify collections based on citizenship, noting that the inclusion of foreigners under the SST only started in July for private education and healthcare services. To address concerns from small businesses, the ministry stated that micro, small, and medium enterprises (MSMEs) with annual sales below RM1 million would be exempted from the service tax on rental services. Construction service providers will also benefit from a higher threshold of RM1.5 million in annual revenue before the tax applies, up from the previous RM500,000 limit. A similar exemption threshold will apply to small healthcare providers such as private clinics to minimize compliance burdens and operating costs. The ministry stated that the additional SST revenue would help support growing government expenditure in 2025, including RM13 billion for cash aid schemes, RM64 billion for education, and RM45 billion for healthcare.
Yahoo
2 days ago
- Business
- Yahoo
ATO's major tax return update for 15 million Aussies: ‘It's time'
The Australian Taxation Office (ATO) has given Aussies the green light to lodge their tax returns, saying "it's time". Taxpayers had been warned against lodging their tax returns too early, or risk making a mistake and being flagged for review. Now the ATO has given the all clear for taxpayers to begin lodging, as most with simple affairs will have their information pre-filled into their accounts. Assistant Commissioner Rob Thomson said the ATO had completed the pre-fill of more than 91 million pieces of information from employers, banks, government agencies and private health insurers. 'You've been patiently waiting, but now you're good to go! Whether you lodge using a registered tax agent or lodge yourself through myTax, pre-fill information will now be available,' he said. RELATED ATO tax bill warning as reason Aussies hit with debts revealed The top 10 highest salaries in Australia paying up to $700,000 Centrelink's 'balancing' move could provide cash boost or expose debt If you are lodging yourself, you'll need to check all the pre-filled data is correct, add anything that's missing and then include any deductions you are entitled to claim. Aussies have until October 31 to lodge their tax returns if they are doing it themselves. If you are going through a professional, you have up until May 15 next year. 'Don't forget that you need to include all sources of income in your tax return. This includes side-hustles, linked income from providing ride sourcing services or selling services via an app,' Thomson said. 'Remember, the ATO has 40 industry and occupation specific guides to assist you in what you can claim and what records are required to prove it.' Who should wait to lodge their tax returns? Most Aussie taxpayers with simple affairs can start lodging now, but if you have more complex affairs, it could be worth waiting. Hive Wise founder Hripsime Demirdjian told Yahoo Finance salaried employees with no investments were now in the 'safe zone' to start preparing their tax returns. 'However, if you're someone who has a more complex tax return, which includes investments such as managed funds, you would be wise to hold off lodging your tax return until August/September, as this information is generally not available until then,' she said. 'In all cases, you want to make sure the data in your prefilling report is marked as 'tax ready' before you lodge it as this indicates the data is complete." When will I receive my tax refund? Once your tax return is processed, you'll receive a notice of assessment from the ATO. This will tell you if you are entitled to a tax refund or if you owe any tax. Finder research found more than 10 million Aussies were expecting a tax refund this year, with the average person anticipating a $1,519 boost. You may get a refund from the ATO if you paid more tax during the year than you should have. However, accountants have noted it's not necessarily a good thing to get a big refund. The ATO app and ATO online services through myGov allow you to see the progress of your refund once you or your registered tax agent has submitted it. 'Most refunds are finalised within two weeks and this process cannot be sped up, even if you call us,' Thomson said.
ABC News
2 days ago
- Business
- ABC News
ATO reversed its own decision to bill former PM Paul Keating's company nearly $1m after three-year battle
The Australian Taxation Office (ATO) wrote off almost $1 million in interest and penalties owed by one of Paul Keating's companies in 2015, in an abrupt about face after negotiations with the former prime minister and his financial advisers. This was unusual because for most taxpayers, formally challenging such a decision would require them to contest the matter in the Federal Court. In this case, the payment notice was cancelled after a negotiation, raising questions about the treatment of powerful people by Australia's chief revenue collection agency. It also raises questions about a lack of transparency in how the tax office conducts confidential settlements. Four Corners does not suggest any wrongdoing by Mr Keating or his advisers in seeking to have the debt cancelled. Four Corners first contacted Mr Keating two weeks ago to request an interview about how this settlement came about, but he declined. The interest and penalties bill was issued after the ATO discovered in 2012 that Mr Keating's company, Brenlex Pty Ltd, had not reported profits from an earlier share sale. This followed a 2010 agreement by Mr Keating to settle tax liabilities of more than $3 million involving another of his companies, Verenna Pty Ltd. At the time, Mr Keating was questioned about his other companies, including Brenlex, and his advisers confirmed it had paid a significant amount of tax relating to the sale of shares and was up to date with its tax liabilities. Mr Keating agreed he would ensure his tax affairs were in order henceforth. However, the ATO later discovered that Brenlex owed $446,000 in tax from the sale of shares years earlier in Lake Technology, an audio engineering company Mr Keating had advised. Brenlex agreed to pay the tax debt, but the ATO demanded more than $600,000 in interest and penalties which had accrued in the years since Mr Keating sold the shares. These are known as a general interest charge (GIC) and late lodgement penalties. Mr Keating's advisers fought to avoid the interest and penalties, asking the tax office to write them off entirely via an ATO rule known as a "Commissioner's discretion". The argument went back and forth through 2013 and 2014. By October 2014, the debt had grown to $904,000, at which point the ATO sent a formal notice to not waive the interest and penalties charge. "Your request has been fully considered and it has been decided that on this occasion the circumstances detailed do not warrant remission of the GIC," the notice said. "There is a clear acknowledgement that the Company should have accounted for the disposal of shares in the relevant financial years returns and did not." In April the next year, the ATO issued Brenlex a formal creditor's statutory demand to pay the debt within 21 days, which had now grown to $953,396. Mr Keating then became involved in the correspondence as part of efforts by his advisers to persuade the ATO to waive the bill because, they said, it was an honest mistake. Mr Keating's advisers told the tax office the former prime minister had mistakenly believed his company Brenlex had paid the tax. They argued he had "inadvertently failed to advise his directors" of the sale, despite filing a substantial shareholder notice reporting the disposal of the Lake Technology shares. Mr Keating's advisers argued "the lodgement and payment of the Company returns were overlooked" but the tax office said "This is not a valid justification". The ATO was told Mr Keating had truly, though incorrectly, believed that all tax matters with Brenlex were up to date. The tax office refused to alter its position. In July 2015, a last-ditch letter from Brenlex was sent to the ATO requesting a meeting. Ten days later, the tax office made a backflip. In a four-line email it wrote off the almost $1 million debt. "I am able to confirm that the GIC and Late Lodgement Penalties … have been remitted in full," the email said. "Consequently the balance of the account has been reduced to nil and the amount payable as stated in the Creditors Statutory Demand is no longer owed." The email gave no reason for the sudden change of heart. The ATO's reversal of its decision, having issued the October 2014 notice, was unusual. Just how unusual can be seen from a joint submission to a Senate committee this year by five accounting bodies. They said it was unfair that the only recourse available to taxpayers to challenge this kind of decision was an appeal to the Federal Court, which was a "lengthy and complex process that is out of reach of most taxpayers". They complained that these decisions were "not subject to an internal ATO review. The only recourse available to the taxpayer is to appeal the ATO's decision in the Federal Court". In a reminder published on its website last month, the ATO said: "Taxpayers should be aware that remission requests are carefully assessed to ensure a level playing field for those taxpayers who pay on time." These revelations come at a time when the ATO's handling of this issue is under review. The Tax Ombudsman is scrutinising the management of general interest charges, to ensure "decisions are fair and reasonable and are made consistently for taxpayers in like circumstances". Typically, the ATO does not comment on the tax affairs of specific taxpayers due to confidentiality obligations. It told Four Corners in a statement that "inadvertently overlooking" the need to pay tax was generally not valid grounds on which to cancel GIC. "However, there may be instances where GIC is remitted when a taxpayer inadvertently overlooks the requirement to lodge a form or make a payment, depending on the individual circumstances of the taxpayer," the ATO said.
