Andy Burnham’s flagship VAT cut on household energy bills is already leaving him with a sizeable hole to plug at the Budget. Around £850 million…
Burnham is banking on a 0.1% inflation reduction from the VAT cut to ease pressure on cost of living (inflation fell more than expected this morning, but economists expect it to significantly worsen in the second half of the year). If bringing down inflation is a key government priority, there’s another tax cut sitting under his nose that comes without the eye-watering bill…
From 1 October, the Treasury is set to press ahead with another tobacco duty hike. Its own figures show the one-off £2.20 increase per 100 cigarettes and 50g of rolling tobacco is expected to raise just £80 million in 2026-27. Analysis seen by Guido suggests ditching this tobacco tax could reduce inflation by around 0.07%. A cheaper and better way to cool inflation, without burning a hole in the Treasury’s coffers…
Instead, Burnham has gone for the headline-grabbing announcement and the hefty price tag. Another costly pledge piling up in Burnham’s Budget black hole…
One to bookmark for the autumn. He also gave a wishy-washy answer on lifting the personal allowance threshold, claiming he’ll “look at it” at the Budget. There’s a plan, there’s not a plan…
The Downing Street operation is already mopping up after its overenthusiastic Prime Minister. On two counts…
During a ‘huddle’ with reporters on Monday, Andy Burnham told hacks he was interested in raising the personal allowance, which has been frozen. He had signalled his intention the weekend before, and claimed it came up the whole time on the doorstep in Makerfield. Last night No10 said this would not, in fact, happen. That’s one…
Burnham also suggested the 45p tax rate would be hiked to 50p in discussion with journalists. Two days later that has also been reversed, with No10 staff insisting that the manifesto stands. Guido pointed out this would be a direct breach of the manifesto. That’s two…
That’s a current rate of one U-turn per day. Lots of days to go…
Wes Streeting has called for a massive hike in Capital Gains Tax as part of his pitch for the leadership. Or the highest office possible under Burnham…
Streeting complained to the BBC’s Political Thinking podcast about the tax system and proposed a “wealth tax that works“:
“A member of my family is a cleaner in Lancashire. She pays a higher tax rate on her salary than her landlord pays for the growing value of the home she lives in. She slogs her guts out, he puts in far less effort, yet the state rewards him more than her. And we wonder why people are angry.
The system is penalising work. It’s not fair and it’s bad for our economy. We need a wealth tax that works. A pound made from simply owning assets should not be taxed less than a pound made from a hard day’s work. We can do it in a way that is pro-growth, pro-entrepreneur and pro-work.”
The former Health Secretary, who gave his resignation speech in the Commons yesterday, has misunderstood capital gains, which are not income. International evidence (and UK evidence) shows that when CGT rates go up revenues go down…
Streeting’s proposal is for capital gains tax rates to match the three bands of income tax – 20%, 40%, 45%. “Under the proposal, a person’s capital gains tax band would be calculated by adding up their income and profits from assets.” If the tax rate was 40%, then an increase from 24% to 40% would be a 66.7% increase and an increase from 24% to 45% would be an 87.5% increase. Streeting relies on a paper by the architect of the now-discredited Farm Tax which claims £14 billion could be raised…
HMRC’s own calculations show that increasing higher Capital Gains Tax rate by 10 percentage points (a 21% increase in the rate) would actually reduce revenue by £3.5 billion. A 5% increase would reduce it by £870 million. Increasing the lower rate also reduces revenues – the relatively modest CGT rises that have already taken place have resulted in significant lost revenue…
The latest HMRC stats from 2023-4 shows that the average gain per CGT taxpayer was about £174,000 in a year. That means the 45% tax rate in the majority of cases, which according to HMRC forecasts predicts a £7 billion loss in tax revenue…
With three exceptions European countries tax capital gains at substantially lower levels than income. Those three all tax them at between 20% and 10%…
Streeting has proposed this idea before in a pamphlet which seems to represent the last time he thought about policy. The ‘Labour Growth Group’ has mostly copied Farm Tax creator Arun Advani’s proposals in their own paper. Pop that in the bin…
Guido also called this at the beginning of the month. Tomorrow’s news, today…
There are growing demands for Angela Rayner to publish the documentary evidence from HMRC that details how she did not act “carelessly” and had no penalty to pay. Because it doesn’t make sense…
Tax experts led by Labour’s Dan Neidle yesterday challenged the supposed ‘exoneration.’ If it really exists…
Neidle subsequently spoke to tax barrister Graham Aaronson KC, who said Rayner could challenge the extra tax bill in court – a proposition she refused. He put forward her side but Neidle concluded: “The position remains: we can’t assess whether HMRC acted correctly. If Ms Rayner wants people to accept that she acted properly, and HMRC’s decision was correct, then she should release the evidence that led HMRC to conclude she was not careless.”
Eyebrows have also been raised after Aaronson sent a two-page legal letter requesting that HMRC close the matter “as soon as possible,” after which she supposedly received a decision within 24 hours. Barking orders to the taxman doesn’t usually work for punters…
Guido hears that when Rayner was previously “exonerated” – about which concerns were also raised – just as the general election was called in 2024, the journalists with whom she did media did not see any proof. It was all based on trust…
The phantom ‘tax advice’ she received earlier in that scandal was never and has never subsequently revealed either. Even Starmer did not see it. Now once again no evidence has been published, and the media gave Rayner gasping interviews for her grand return to the fray on Thursday…
Basically what people must conclude from this HMRC decision, if it indeed is an HMRC decision, is that if you’re confused about how much tax to pay, you shouldn’t seek professional advice. You should just pay the lowest amount and hope that it all works out OK, knowing that if it doesn’t then you won’t have to pay any penalty. Unless Rayner publishes evidence to the contrary…
HMRC data published today shows 864,000 self-employed workers and landlords will be forced into quarterly digital tax reporting when ‘Making Tax Digital for Income Tax’ goes live in April. The construction sector is the worst affected, with 251,000 businesses caught by the new rules. That is nearly a third of the total. One-man band plumbers, electricians, and bricklayers who are now required to file four times a year instead of one…
London accounts for the single biggest regional share at 167,000, boosted by 35,000 landlords-only, nearly three times the number in any other region. Across the country 118,000 people whose only qualifying income is from property will be pulled into the pointless regime for the first time.
The mandate applies to anyone with combined self-employment and property income above £50,000. Each will need compatible accounting software to submit quarterly updates to the tax man, so that’s yet another new recurring cost on top of the extra tedious admin. At least the accountants will be happy. And good luck getting on the phone to HMRC when this system inevitably hits the skids…
Tom Baldwin, author of Starmer’s hagiography, spoke to Times Radio:
Tom Baldwin: “I think he’d like to do something. He’s very dutiful and driven by service. That’s why he came into politics. I think that’s characterised his time as prime minister. He hasn’t always sought popularity or been good at being popular. But I think he has some of the necessary qualities that we actually do want in a prime minister. That resilience, that relentlessness, that ability to carry the weight and the job really does weigh very heavily on people and he carries that weight very, very well.”
Jo Coburn: “NATO Secretary-General?”
Tom Baldwin: “I think that’s something that he would be interested in. I think it probably requires Andy Burnham’s government to support him in that and these are some of the questions which Andy Burnham has to resolve quite quickly.”