Chancellor Rachel Reeves refuses to rule out increasing taxes on pensions.

04/09/2024


Chancellor Rachel Reeves refused yesterday to rule out increasing taxes on pensions in her upcoming Budget when challenged by shadow Treasury minister Nigel Huddleston. “During the election, Labour promised on more than 50 occasions not to increase taxes on working people. Do they recognise that working people have pensions too? And therefore can she give those people saving for the future peace of mind by confirming that they will not increase taxes on pensions in the upcoming Budget?” he asked. Reeves responded: “I’m not going to speculate about what will be in the Budget, but I’m absolutely determined to ensure that working people are better off”. Potential changes that have been rumoured include moving to a flat rate of tax relief or cutting the amount pensioners are able to withdraw from their pension pots tax-free.

Meanwhile, State Pensions could rise by more than £400 to £12,000 next year, according to The Treasury’s internal working calculations made since Chancellor Rachel Reeves reaffirmed the Government’s backing for the so-called pensions’ triple lock until the end of this Parliament.

The first UK gilt sale since Sir Keir Starmer became Prime Minister saw investors place £110bn of orders for a £8bn sale yesterday, a level of demand that was the highest ever recorded in proportion to the size of the sale, according to an analysis by BloombergThe Debt Management Office (DMO) was selling 15-year gilts that will mature in January 2040, paying an interest rate of 4.375%. Market participants said the relatively short duration of the debt explained the demand: Megum Muhic, vice president at RBC Capital Markets, told the Telegraph that falling life expectancies in retirement meant UK pension funds were racing to buy 15-year bonds, instead of 25-year bonds, so they could realise their investment gains sooner. The average life expectancy for a man in Britain aged 65 dropped from 23 years to 21.5 between 2015 and the end of 2023. For women of the same age, it fell from 25.5 years to less than 24, according to the Institute and Faculty of Actuaries.

The Payment Systems Regulator (PSR) is said to be looking at an £85,000 payout limit for victims of push-payment fraud, a significant reduction from the proposed £415,000 it currently expects banks and payment firms to reimburse from 7th October. The Financial Times claimed the PSR had heeded complaints from the financial sector and some politicians, as well as Treasury officials who had warned the current proposals were a “disaster waiting to happen” because it risked bringing the banking system to a halt as additional checks prevented genuine payments, and by encouraging criminals to exploit the new rules. The regulator has declined to comment so far. Previously, the PSR said that the “maximum level of reimbursement has attracted a particularly high level of feedback, and involves difficult trade-offs”. It added it “may consult on revising the level ahead of October if there is convincing evidence to do so”. Meanwhile, There has been a huge surge in fraud related complaints. Separately, the Financial Ombudsman Service (FOS) says that between April and June this year, consumers made 8,734 complaints about fraud and scams, up from 6,094 cases in the same period last year, and the highest quarterly reading since the FOS started tracking the data in the first three months of the 2018/19 financial year. More than 252,000 cases of authorised push payment scams worth about £341m last year where people lost money from their accounts to fraudsters posing as genuine payees.

Oxford Economics has warned that changes to the non-dom tax regime could trigger a “mass exodus” of wealthy investors from the UK that will cost the Treasury around £1bn by the end of this parliamentary term. The economic forecaster polled 72 non-doms and over 50 tax advisors and found nearly two thirds of non-doms are planning to leave the UK within the next two years because of Labour’s plans. More than 8/10 of them identified the application of inheritance tax to their worldwide assets as the main reason behind their decision to consider emigrating. 67% said they would not have moved to the UK had the reforms proposed by the Government been in place when they did so. In 2023, HMRC took nearly £9bn in tax and national insurance contributions from the 74,000 individuals with non-dom status, the 200-year old tax scheme that allows foreigners to live in the UK without paying tax on their overseas income and assets.

Brits spent a record £6.1bn on live music and associated trade at such events last year, the sector has revealed. Live, the federation representing Britain’s live music industry, said the figure adds up the economic impact of more than 55,000 gigs, concerts, festivals and events, and is 17% up on 2022, and 35% up on 2019, before Covid lockdowns ground the industry to a halt. Growth was fuelled largely by concert revenues, which climbed 19% year on year, driven by big tours including those by Beyoncé and Coldplay, which accounted for almost three-quarters of the total economic impact.

The RAF is replacing its ageing battlefield helicopters but two of the three expected bidders for the £1bn contract have walked away, The Telegraph reports. Neither Airbus nor US manufacturer Sikorsky submitted bids to replace the fleet of 50-year-old Pumas, citing unattractive contract terms, leaving only Italy’s Leonardo in the running. The fear now is that the project will be scrapped, the newspaper says. Defence Secretary John Healey said yesterday some “tough choices” on spending needed to be made and that didn’t exempt military projects, and lack of competition for the helicopter contract could make it a target. That, in turn, puts the future of Britain’s only helicopter plant in Yeovil, Somerset, in doubt. Formerly known as Westland Helicopters, the plant is now part of Leonardo and employs 3,300 people.

Sir Paul Marshall, the hedge fund tycoon and significant investor in GB News, is days away from buying The Spectator for £100m according to The Times, while Sky News says the remaining bidders for the whole Telegraph Media Group – including Marshall and National World, the London-listed media group run by newspaper veteran David Montgomery - are participating in management presentations to Telegraph executives to finalise second-round offers. At least one other party whose identity has yet to be disclosed publicly is also thought to remain in contention to buy the newspaper group, Sky says, adding that if Marshall does buy the Spectator for £100m, the Daily and Sunday Telegraph will have to sell for £500m if current owners RedBird IMI are to recoup the £600m they bought the group for before the Government banned foreign ownership of British newspapers. A £350m offer for the whole group from advertising moghul Lord Saatchi was rebuffed earlier in the year.

Aldi has told the Prime Minister to speed up the planning permission process for new supermarkets.  George Brown, Aldi’s national real estate director, said on LinkedIn he had met with Keir Starmer’s senior special adviser last week, and bemoaned the fact it can “take us over 12 months” to get planning permission for a new store, “due to under-resourcing in local authorities”. He also suggested planning authorities were more likely to approve warehouse schemes or industrial estates, despite those properties leading to fewer jobs for local people. “To unlock significant investment in the UK economy this needs to change,” he added. Currently, Aldi has some UK 1,020 stores and plans to open a total of 1,500, although it has not set a timetable for this target.  

Cupra, the brand of electric vehicle owned by Volkswagen will be “wiped out” if planned European Union tariffs aimed at China go ahead, Wayne Griffiths, CEO of the Cupra and Seat brands has said. Cupra EVs, designed in Spain but manufactured in China, face tariffs of 21.3% under the EU proposals. Raising the price of the Cupra Tavascan, an all-electric SUV that sells currently for around €52,000 euros (£43,800), was not an option in the current European economic environment, Griffiths said, and neither was moving production to another location, as the company had already invested in building up capacity at its plant in China Volkswagen’s Anhui plant, a majority-owned joint venture with China’s JAC Automobile Group. Without the projected Tavascan sales, Cupra would also miss EU-mandated carbon dioxide reduction targets next year and face heavy fines, Griffiths added, forcing it to cut output and jobs in Spain.  “It puts the whole financial future of the company at risk,” he said, noting that if the intention of the tariffs was to “protect the European car industry,” for Volkswagen, it will have “the opposite effect”. “We’re not a Chinese brand trying to swamp the European market. Our cars are not for the masses. The car is not a subsidised product. We’re a different animal,” he said. Griffiths’ comments come a day after Volkswagen said it was considering closing factories in Germany for the first time in its 87-year history to cut costs amid increasing competition and the establishment of EU factories by lower-cost Chinese giants. Brussels’ originally proposed a 38.1% tariff on imports from China.

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